Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Recordati conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Federica De Medici, Investor Relations and Corporate Communications. Please go ahead, madam.
Thank you, Judith, and good afternoon or good morning everyone, and thank you for attending the Recordati conference call today. I'm pleased to be here with our CEO, Robert Koremans, and Luigi La Corte, our CFO, that will be presenting the 2022 first half results. They will be running you through the presentation. As usual, the set of slides is available on our website under the investor section. After that, we'll be opening up for Q&A. I will now leave the floor to Robert. Please go ahead.
Thank you, Federica. I'm happy to announce very strong revenue and profit in the first half of this year for Recordati. With continued strong cash flow generation, we have a revenue growth of over 15% at constant exchange rate and adjusted for both the EUSA Pharma acquisition and for accounting of Eli Lilly in 2021 prior to the switch to direct sales. Our growth is strong and just under 9% compared to previous year. EBITDA at EUR 334.9 million was up by 11.5% compared to the first half at 37.5% of revenue, reflecting the strong revenue growth and continued cost discipline more than offsetting impact of inflation. Very strong free cash flow generation of EUR 218.7 million, increasing by 7% versus the same period last year.
There is a really strong momentum across both our businesses and continued post-COVID recovery. SPC with high single digit growth ahead of reference markets. Of course, this level of growth rate is also explained by slightly softer first half of 2021, still at that point impacted from COVID. Overall, we're seeing a very strong rebound from the cough and cold segment and OTC, but we see also a very broad growth across the entire portfolio. In our rare disease business shows double-digit growth, driven by both metabolic and the endoc franchise, with sales of Isturisa and Signifor on track with plan. Our new rare oncology franchise, the former EUSA Pharma, results are really above plan. With strong revenue of EUR 46.1 million in quarter two, in part with some favorable phasing of shipments to partners in the quarter.
The business is now fully integrated and fully operational and fully in line with our schedule. We've taken multiple actions to offset inflation. Price increases across multiple parts of the portfolio wherever possible, and very effective SPC efficiency measures already announced earlier, like the right sizing of our sales forces. These actions sustain our margins. Year-to-date results are affected by hyperinflation accounting in Turkey, which determine revaluation of local assets and minor P&L impacts, resulting in a revenue uplift of around EUR 3 million and a negative effect on operating margins of around EUR 5 million. As expected and broadly in line with our plan, non-recurring cost of EUR 26.4 million. They're mostly related to the EUSA Pharma acquisition. That's about EUR 15 million, and to one-off charges of SPC's right sizing and also to the assistance in the Ukraine conflict related to donations.
As Luigi will explain later, our reported net income and operating income are impacted by fair value IFRS 3 adjustments related to the EUSA Pharma acquisition, and they are expected. Also some FX volatility affecting our financial expenses. On an adjusted basis, our adjusted net income is EUR 224.8 million, up 7.1% versus previous year. With that, absorbing the unplanned FX losses, particularly related to the Russian ruble. There's also some good news from the ESG side. Our efforts to continue to be recognized by FTSE4Good Index Series, we are reconfirmed and an increased rating from Gold to Platinum by EcoVadis. Before handing off to Luigi La Corte, I will give a little bit more detail on the performance of EUSA Pharmaceuticals. On the next slide, please.
Here you see the EUSA Pharma results and some of the key highlights. Like I said, we are really well on track for the integrations. We've announced a new rare disease organization earlier this month, early July, and we are operating fully integrated with our onco franchise in place. Sales in the second quarter of this year were EUR 46.1 million. Pro forma first half of 2022 are EUR 84.5 million, a growth of about 15% versus the first half of 2021. Mainly driven by sales and performance across all regions. An increased penetration of Qarziba in Europe, but also benefiting a little bit from shipments to partners, particularly to China, in relation to the Sylvant launch.
For full year 2022, we expect to close to EUR 130 million revenue and EBITDA margins of approximately 25%-30%. Qarziba U.S. discussions with the FDA are ongoing. Target filing is still expected to be in 2024. Also, like we mentioned in first quarter results, we are looking at new indications for Sylvant and in the process of evaluating this and should be able to come back later this year with some complete proposals around it. There's very positive news related to the financing of the transaction. This has been finalized with a new five-year variable rate term loan at very competitive rates, which reflects the strong creditworthiness of our group. Finally, as anticipated before, we have finalized the purchase price allocation related to the EUSA Pharma acquisition.
I will let Luigi explain and address the questions related to this. Luigi, please.
Thank you, Rob, and good afternoon and good morning, everyone. I will comment first as usual revenue, but we'll try and go through this quickly so as to get to the P&L, which I'm sure some people may have questions. As Rob has said, our sales of both of our business units were very strong in the first half of the year. Yes, benefiting from recovery of markets, but in a number of areas with growth ahead of relevant markets as measured by IQVIA, and with very strong momentum of our key growth drivers. I would first, though, like to call out on this slide the stability of our key mature products.
The liraglutide franchise sales in markets where we have direct presence are broadly stable, with the decline overall really being driven, as we anticipated at the start of the year, from the loss of tenders in China and the high initial shipments we made to our Chinese distributor in 2021, and a little bit of phasing of shipments to our partners, particularly in Eastern Europe, which we do expect to recover in the second part of the year. You do see Seloken after, you know, an increase in 2020, decline in 2021, now again stable broadly in the first half of the year, as is Silodosin.
Nice to see actually Livazo posting strong growth on the back of growth in Russia, Portugal and Switzerland. I think this once again reinforces the ability of the group to stabilize and drive sustain the sales of these products post-loss of exclusivity. You'll see also a strong contribution to growth of Eligard, which we realized at the beginning of 2021, which added close to EUR 15 million of revenue in the first half of this year. Of course, as we've explained multiple times, a part of that is due to the gradual switch to direct selling over the first part of 2021, roughly EUR 11 million of that account for roughly EUR 11 million of the growth.
As you will see, Eligard, the Eligard franchise is starting to return to growth, particularly in Spain, in France, and now starting to see good signs also in Italy and other markets. Sales of other corporate products, of course, grew very strongly, close to 19%. These really reflect the recovery of the cough and cold portfolio, where revenue is pretty much back in line with levels achieved before the pandemic. You also see strong growth of the gastrointestinal portfolio, Citrafleet, Lomexin, Reagila, and several of our OTC products, you know, particularly probiotics, Magnesio Supremo and the Endo.
All of this, I would like to underline, achieved whilst at the same time, continuing to innovate our go-to-market approach, and right sizing us in a targeted way some of our sales organization in SPC. Drugs for rare diseases, of course, you know, posted a very high growth, close to 44%, EUR 260.4 million. Clearly that includes the contribution of EUSA, which Rob has already spoken to, of EUR 46.1 million. But nice to see both of our, let's say, legacy rare disease franchises, both the Endo and the metabolic, both continuing to grow.
In the case of Endo, it's nice to see Signifor continuing to grow above 10% and revenue of Isturisa at EUR 36.5 million, 2x the sales that were achieved in the first half of 2021. On track to deliver on the expectation that we set for this product. Switching to slide five, you know, drugs for rare diseases now account for just under 30% of the revenue, and of course, will grow as we sort of, you know, fully consolidate for a full year the revenue from EUSA. Again, emphasize OTC growing by double digit, in fact, just above 15% in the first six months. On slide six, revenue by geography, and again here, I will not go market by market.
I know it's a very busy day for many of you on the call. I'll just call out, comment some of the, let's say outliers in terms of growth rates. First of all, nice to see, you know, most of our key geographies growing. Now, of course, this reflects also the contribution of EUSA. Revenue in Italy, growing by 6%, slightly below the average, with, strong growth of cough and cold in OTC, and strong growth also of rare disease, which does however contribute a little bit less than for other markets in Italy, pending reimbursement, discussions, on, Isturisa, in particular. U.S. is clearly a key growth driver, and now our number two market with growth of, 48.4%.
Now of course, that benefits from a bit of tailwind on the U.S. dollar, which accounts for roughly EUR 10 million of growth and the contribution of EUSA, which you will have worked out from Rob's slide at roughly EUR 9 million to revenue. Beyond that, as we already commented, strong growth in the U.S. of both the Endo franchise and the metabolic portfolio, particularly Farxiga and Cystadrops. I'll skip over to Turkey, where you will see revenue is in euro terms essentially flat versus last year with reflecting the impact of very significant devaluation of the Turkish lira over the last 12 months.
Revenue growth in local currency is up 68.4%, reflecting robust volume growth of the portfolio, but also, you know, significant price increases that were awarded by the authorities, and reflecting also the hyperinflation environment that the country is facing. Russia and other CIS and Ukraine revenue of EUR 50.3 million is up by 51% versus last year. This reflects actually very strong growth of Russia of close to 65% in local currency. Russia sales for the first six months were at EUR 41 million. Revenue in Ukraine at EUR 6 million were just 6% down versus last year.
Most of that obviously achieved over the course of Q1 before the conflict. We still continue to see some sales from Ukraine, but very, very limited, and we don't expect a significant contribution in the remainder of the year. We do also expect the demand in Russia to soften in the second half versus the strong levels which clearly also reflect the destocking in the market in the first half of 2021 and the return to more normal levels of stock in the channel in the first six months of 2022. Finally, sales in North Africa flat with still limitations of imports into Algeria offsetting the growth of our Tunisia business, which is up 9%.
Other international sales, you know, reflecting, you know, strong growth, strong additional contribution from both EUSA and the rare disease portfolio which offset the decline in Alec and Idipine, which I have already commented. You will see from the next slide that, of course, the group continues to have a very well-diversified footprint. The U.S. is not only our number two market, but will start to compete with Italy to become our number one market for the group.
To the P&L, which on slide eight you will see reflects you know what we see a very strong operating performance but also a number of one-offs and unusual items some expected some obviously not expected, in particular the FX losses, which I'll comment in more detail. As a result of the you know significant impacts on the reported results of the fair value adjustment arising from the consolidation under IFRS 3 as a business combination of EUSA, we did decide to add two additional disclosures to facilitate the reading of year-on-year underlying performance of the business, and you'll see that clearly flagged there.
Let me start commenting the figures. You know, gross profit, we already commented on revenue, obviously growth of close to 16%. Gross profit of 70% of revenue is impacted by EUR 16.9 million of unwind of the fair value adjustment to the inventory which was acquired from EUSA, obviously for the portion which was sold in the quarter. Adjusted gross profit, which adjust for this non-cash item, at EUR 641.5 million, is a 13.6% increase versus last year, and the margin of 71.9%, you'll see is still a very strong level, with the decline versus last year really due to two effects.
Number one, as you recall, in the first half of last year, we were not yet selling in most of our markets, E ligard directly, and that enhances gross margin by about just over 50 basis points. Margin in the first half of 2022 is impacted by roughly, you know, EUR 5 million adjustment arising from the application of IAS 29 to our Turkish business, which in April met the criteria to be considered a hyperinflationary market. Barring these two effects, a gross profit margin, adjusted gross profit margin would be broadly in line with the levels achieved last year.
SG&A expenses, you'll see exactly in line with the first half of 2021 in terms of incidence on sales, you know, growth obviously of 15.6%, reflecting, the addition of, EUSA, and additional investments behind our growth drivers, you know, in part offset by, again, some of the initiatives that we've taken, to, innovate our business model and, the SPC, rightsizing. Selling expenses are 24.2% of revenue on G&A at 5.7% of revenue in the first half of 2022. R&D expenses at 11.1% of revenue, also, and growing versus last year, clearly also reflect the consolidation of EUSA, and continued, progression of some of our pipeline programs.
Half of the increase is driven by incremental amortization to the tune of EUR 10 million, EUR 6.2 million of which driven by amortization related to EUSA. Other income/expenses reflects the non-recurring cost incurred for the acquisition of EUSA and the ones related to the rightsizing of SPC. You'll recall that we had announced at the start of the year as part of our guidance that we were expecting EUR 35 million for the full year, mostly coming from EUSA. Now, clearly, you know, a large share of that is incurred in quarter two, you know, just after the acquisition was closed. EUR 15 million of the EUR 26.2 million are driven by EUSA and EUR 10 million from SPC.
Operating income, which clearly is impacted by both the EUR 16.9 million fair value adjustment to gross profit and the non-recurring costs I just commented, is at 26% of revenue. Adjusted operating income, which adjust for these two effects, is at 30.9% of revenue and EBITDA, which is also adjusted for these items, is at 37.5% of revenue and growing by 11.5% versus last year. Both of these remaining at strong levels. I would highlight both operating income and EBITDA are impacted by about EUR 5 million low operating impact of hyperinflation accounting in Turkey, which we do not adjust in these figures.
Clearly the somewhat less expected impact in the P&L for the first half of the year was the one which is impacting on financial expenses, EUR 38.1 million, an increase of around EUR 33 million versus last year. Now if you pick that, you know, our actual increase in debt financing cost is only around EUR 4 million in the first six months, really driven by the extra debt taken on for the EUSA acquisition, and that's very much in line with our expectation. Unfortunately, impacting on this number is EUR 14 million of FX effects and EUR 14 million higher FX losses, you know, driven by the ruble.
You know, beginning of the year, upon escalation of the conflict, we created a small short position on the ruble to create an economic hedge against risks to the assets that we had in the market. Now, of course, as you know, the ruble went from just over 90 to the euro at the end of Q1 to around 56 at the end of Q2. That's generated a significant part of those tax losses and also triggered some consolidation adjustments for margin held in stock. You know, same is true to some extent of the U.S. dollar, but you know, the majority of these are primarily driven by the ruble.
In addition to that, we've had a net EUR 4.7 million monetary loss arising from the application of IAS 29 in Turkey, driven by mainly the revaluation of shareholder equities in the local affiliate. So all in, on a net income basis, reported net income, you'll see EUR 151.4 million is down 27% versus 2021, you know, reflecting both these one-off impacts in 2022, but also the high non-recurring tax benefits that we had in the first half of 2021 of EUR 26 million. You'll see to help you know understand the bridge between net income and then adjusted net income, we've added on slide 9 reconciliation, which you may be familiar with.
We've typically shared this in our more detailed financial results. We thought appropriate to already share that on this call, given the size and magnitude of the effects. You see that net income of EUR 151.4 million, you know, adjusted for the increase in amortization, the non-cash charges from the purchase price allocation to inventory, the non-recurring costs and the net monetary gains and losses arising from application of the IAS 29. Net of the FX effects lead to a adjusted net income of closely EUR 225 million, which is 7.1% increase versus last year.
You will notice, by the way, we're not adjusting for the FX losses which impact financial expenses, as we've never adjusted for these. As we also said, we do expect to recover some of these in the remainder of the year. Hopefully that was clear, but obviously happy to take further questions. On slide 10, you will see EBITDA contribution of our rare diseases is now roughly a third of the total, and margins of both franchises remaining strong. Clearly, rare disease EBITDA 42.3% is below the levels achieved last year. As we said, you know, in these first years, we expect EUSA EBITDA levels to be below the level of our legacy portfolio.
We do see EUSA achieving the levels of our balance of our rare disease business over time. On slide 11, you know, summary of our cash flow statement, as Robert has highlighted, you know, free cash flow remains very strong, you know, despite the non-recurring cost, EUR 218.7 million, an increase of 14, just over 14% versus last year. You recall last year was a strong year in terms of cash flow performance. You'll see that free cash flow is almost at the level of adjusted net income, so a higher rate than it has been historically.
Clearly, the bottom part of the cash flow statement reflects the consideration paid for the acquisition of EUSA, net of the cash acquired, and the new financing that was taken on to finance that acquisition. On slide 12, you know, in terms of net financial position, clearly from our perspective, you know, continue to remain a very solid balance sheet with net debt of just over EUR 1.4 billion, being slightly over 2.2 x EBITDA, or slightly below 2.2 x if pro forma for EUSA results for a full 12 months.
Should add, in terms of that increase in loans, as Rob has briefly commented, we are very happy with the terms of the financing we have achieved for the EUSA acquisition. Now finally, from my side, switching over to slide 13, in looking at the outlook and the projections for the remainder of the year, as we said, business momentum is strong. On the back of that, we expect overall revenue to be at the top end of the guidance range that was set at the beginning of the year, with slightly favorable effects in the second half, which should offset the slight headwind that we had in the first part.
We've been transparent about the assumption that we've used for the ruble, given the high volatility, and expect our specialty primary care business to grow low- to mid-single-digit. Obviously, it grew high-single-digit in the first half, but we all know that the second half will provide a somewhat tougher comparable. We do, as we said, expect a somewhat softening of demand in Russia and a limited contribution from Ukraine in the second part of the year. We do expect our legacy rare disease business to continue to grow at a sustained double-digit, albeit we will start to see a little bit of an impact, as we said from the start of the year, from generic erosion on Carbaglu in the second half.
We do expect both of our key growth drivers, Eligard and Endo, to achieve the objectives that we set. As you will see, we expect you know, a slightly higher contribution from EUSA, close to EUR 130 million revenue for the three quarters that we're consolidating. We expect EBITDA and adjusted net income around the middle of the guidance range, as we do expect since targets were set a little bit higher inflationary pressure, particularly in the second half. As I've commented, the impact of IAS 29. I do expect adjusted net income to be a little bit volatile because of the effects impact on financial expenses.
To help with modeling, we have set out on the bottom part of this slide, you know, the assumptions, you know, we're making around both financial expenses, the non-cash charges arising from the purchase price allocation of EUSA and finally the non-recurring cost of around EUR 40 million with a slight acceleration of the rightsizing in SPC. With that, I'll turn over to Rob with some closing comments.
Yeah. Thank you, Luigi. Overall, very pleased with the performance of the business today. Yes, there are challenges and, but we continue to be able, as Recordati has always done, to address these and, do a really good business. We confirm all our targets for 2022, with revenues at the top end of the range, as Luigi already commented. The momentum is really good, and I'm very confident for the outlook for the business and our ability to continue to thrive. Yes, there are volatile times, but Recordati has been able to demonstrate also this year that we're able to deal with the challenges and the volatility. We have a very good solid base for our business, that is really growing nicely and, we expect to continue to do so.
Thank you for your attention. This is the end of the presentation and I'll open the floor to questions.
Thank you. This is the Chorus Call Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Harry Sephton with Credit Suisse. Please go ahead.
Brilliant. Thank you very much for taking my questions. I have three, please. Firstly, could you please touch on the dynamics that you're seeing in the underlying rare disease portfolio? Excluding the Endo franchise in U.S.A, it looks like it's growing around 5% year-on-year. Just wanted to understand some of the dynamics, whether there's anything dragging on growth there. My second question is on U.S.A. Clearly, it's progressing well. Would you say that the improved performance will follow through into 2023, or are you comfortable with the previous guide that you gave of EUR 150 million in sales? My third question is, well, we rarely get an update on the pipeline. I just wanted to ask on some of the assets you have there, specifically the REC 0545 in maple syrup urine disease.
What can we expect in terms of timing for that asset and any contribution? Also your preparations for the nasal epinephrine spray with the expected decision from the EMA in the second half of this year. Many thanks.
Thanks, Harry. Happy to address some of the questions. Yes, for the rare disease, the metabolic, say, the traditional franchise, as we have highlighted, we do see some generic impact on two of our products there. We've seen for both products there, first generic entering the market, already now, and we expect it for both of them. We will see additional generics coming into the market in the second half of the year. The first generic hasn't really surprised us, quite frankly. The performance continues to be strong, but we believe it's a bit too early to now say this is also gonna be the case for the second generic, right?
We have a very good position with our patients, as close as you can get, in all the legal frameworks and limitations there. The business is holding on strong, and we're confident that we can continue to do well. Just to that extent, there will be most likely second generics coming in on the metabolic franchise. For EUSA, we're absolutely happy with this, because the business at the moment is performing really well. Frankly, I do believe that the momentum is good, but it's a little too early to call out any guidance for next year. We now own this business for three months. We'll give guidance definitely on, as we've always done towards the end or beginning of next year.
We'll also take the time and the chance then to talk a little bit about some of the pipeline opportunities that we have with some of the current assets that are not in development but actually already on the market and we see additional indications. There's an opportunity for fairly affordable and nice opportunities there. I couldn't quite get the other part of your question, quite frankly, because the line broke a little.
Yes. Sorry. It's my third question, which was just around an update on the pipeline. I think really the assets I was looking at were REC 0545, which is your rare disease asset in maple syrup urine disease. I was wanting to just get an update on the timing for that and any potential contribution for that. Also, your preparations ahead of the nasal epinephrine launch in the second half of this year.
Well, on MSUD, we're progressing as planned. The project is going according to plan. There's no, in that sense, no update to give other than it's good news. We're progressing as planned.
No, Harry, hi. I think on MSUD, we're on track with what we said in the past. I think we expect the filing, you know, at some point late this year, early next year. We've always also said that it's a fairly small sort of patient population that we're looking at here. I think your other question, if we've understood correctly, was around ARS, the different spray. We are addressing questions that we had from the European authorities. We plan to, as you may have seen, we pulled the dossier and prefer to resubmit. We're collecting additional data that was requested and expect to do that in the second half of this year.
Then we'll have to see, you know, when we get the final green light from EMA. Hopefully that addresses your question, Harry.
Absolutely. No, thanks very much, Luigi.
Thanks, Harry.
The next question is from Keyur Parekh with Goldman Sachs. Please go ahead.
Hi, thank you for taking my questions too, please, if I may. The first one is you're talking about reducing 64 kind of full-time employees kind of from an SPC perspective. Just wondering if kind of how you guys are thinking about this kind of going forward. Is this kind of one and done, or do you think this is the kind of restructuring and reshaping of the business that we should continue thinking about as we go forward? Then separately, kind of from an FX perspective, apologies, Luigi, I know you've spent a lot of time explaining this, but just trying to get my head around what kind of current levels of FX imply for your second half up and down the P&L. Obviously on hyperinflation, you will get a benefit kind of on the top line.
Should we continue to expect kind of levels of impact further down the P&L? When does that reverse out? Thank you.
Hi Keyur. I'll start with the second piece if you like, on effects and particularly hyperinflation. You're right and hopefully we called it out. You know, hyperinflation added roughly EUR 3 million to revenue in the first half of the year. Unfortunately, you know, we hold at the moment you know fairly robust levels of inventory, let's put it like that, in Turkey, which means that the you know revaluation effects on inventory is slightly higher and offsets that, so that at the gross profit and operating income level, the impact is around sort of EUR 5 million.
Now that's offset clearly in monetary gains and losses, which however, you know, are impacted by the revaluation of the balance sheet and particularly of shareholder equity, which more than offset that to the tune of which result in the net EUR 5 million that I spoke of. You know, we're making some assumptions obviously around inflation in Turkey. You know, our estimate as we set out is for that to impact to the tune of around EUR 10 million for the full year. I may comment, but then I'll turn it over back to Rob. I mean, the right sizing SPC will be a continuous improvement.
Yes, very much. Of course, I think you've seen the biggest challenge, the right size in terms of numbers of people in this year. We will continue to improve our commercial not only footprint, but also ability using more and more multi and omni-channel, and this has impacted. Depending on whatever products we bring in additionally to launch, we might have to adapt to some extent slightly our structures. We continue to evaluate the market, the environment, the commercial effort we need and the opportunities at hand. It will be ongoing, but I expect the biggest part behind us.
Keyur, I guess we should say, you know, while, you know, so to some extent, you know, we're right sizing, particularly on the sort of primary care lines. We're also, you know, on the rare disease side, and the specialist, like we are evolving the organization. So, you know, it's not just a net minus.
Yeah, exactly.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is from Bruno Permutti with Intesa Sanpaolo. Please go ahead.
Yeah, good afternoon, everyone. I have a few questions. The first one concern the prices. I was a little bit surprised that you succeeded in increasing prices and to offset inflation. If you can give us some details on this and on the size, more or less the size you on average which you had in the first half. The second point also on prices concerns the outlook. What do you expect in the coming months and do you expect any impact from eventual regulatory initiatives in the U.S.? The last one is regards the FX impact.
If you can share with us your budget at U.S. dollar for any change, and also if you made some guess on the Turkish lira?
Thank you for the questions particularly on pricing. No, first of all, we didn't say it sort of necessarily fully offset, but I think historically I've always commented that you know, barring you know major new losses of exclusivity or major events you know the company has seen a sort of a level of year-on-year price change of between ± 1%. I think what we were able to do this year is go a little bit beyond that.
I'd say if I exclude Turkey, because Turkey is a little bit of an outlier and obviously it's hyperinflationary environment on the cost side as well, we're probably now somewhere between +1% and +1.5%. So it's obviously positive and, you know, on our P&L that helps, given the structure. And on FX effects, you know, we've never really give. We typically budget on the basis of consensus in January. You know, we don't typically sort of, you know, set out or publish budget effects assumptions.
You know, we've now shared, you know, our assumptions, the planning assumptions for the ruble because the very high volatility that that currency has had and the impact that it's had on FX losses. Hope that makes sense.
Yeah. On the question of the expected regulatory impact, frankly, in the U.S. for our rare disease business, we do not see any impact coming from any of the measures in the coming period. Of course, there are always discussions in Europe on what can governments do to help them manage all of the healthcare expenditures. I don't think that they'll get, specifically for our business, any more strict or restrictive than what we've seen so far. So far it's a bit of crystal ball, frankly. So far what we've seen is very clear from the U.S. We don't expect any real impact.
Thank you.
The next question is from Giorgio Tavolini with Intermonte. Please go ahead.
Hi. Good evening, and thanks for taking my questions. I was wondering if you can elaborate more on the 40% increase of Eligard in the first half, what is driving this performance. The second one is on the bridge of the organic growth since I'm struggling to reconcile the 8.6% organic growth starting from the reported 15.8. If I strip out six percentage points for M&A, I mean, maybe EUSA, EUR 46 million, basically, and also the effects, I don't get the 8.6%. I was wondering if you can double-check the numbers and also for the second quarter, what is the corresponding organic growth. The third question is on the impact from inflation.
In the first quarter presentation, you talked about 50 basis points on top of the other 50 basis points you already anticipated, so roughly one percentage point impact from inflation. I was wondering if it's still valid, this indication, or not. Thank you.
Giorgio. Hi, thank you for the question. Yes, of course, we have double-checked the figures. I think actually the answer to your first and second question are related in the sense that I think the piece which you're missing in your reconciliation is when I commented Eligard revenue, I mentioned that you know, roughly between EUR 11 million and EUR 12 million of the growth is actually a function of the fact that in the first half of 2021, we did not yet in many of our markets have direct selling. Basically we booked in revenue just the gross margin that was transferred to us by Astellas.
I think we're being very extremely transparent and honest in stripping that out from our reported growth. I think if you sort of, you know, add that to your numbers, you should come to the same figure that we come to because those are the things that we're stripping out, basically EUSA, Eligard, and the minor effects erosion. In terms of, again, the Eligard growth of 40%, as I said, for a big chunk is due to the difference in sort of selling models in the two halves.
Obviously we are starting to see growth, as I commented in a number of markets, on a product that was declining when we took it on, particularly good growth in France, Spain, but also Portugal, Turkey, and Italy. With regards to inflation, you know, our view on that has not changed. As we said though, we were not just going to sort of lie down and, you know, take the impact on the chin, but we have been doing what we can in terms of our pricing and maybe to more fully address the previous question.
We've taken pricing up on our OTC portfolio, you know, across the region where we can and where we have more flexibility in some of the central and eastern European markets, including Russia. We're taking pricing up. We regularly take, you know, single-digit price increases in the U.S. on the portfolio as most other companies do. All that, you know, together with some of the measures we've talked about in terms of the right sizing are helping offset those headwinds. I will reiterate what we said in the past, that we're not immune from inflation and everyone sees, you know, the spike that we've had over the last 6 months.
Hopefully, that answers your questions, Giorgio.
Yes. Yes. Very clear. Thank you, Luigi.
Once again, if you wish to ask a question, please press star and one on your telephone. Ms. De Medici, there are no more questions registered at this time. I turn the conference back to you for the closing remarks.
Okay. Thank you very much for joining this call and we wish all of you a very pleasant day. Thank you. You're welcome.
Yeah. Thank you all for joining. For those who will have time to go on a summer break, wish you all a great break, and speak soon. Thank you all.
Thank you.
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