Good afternoon, everyone. We are pleased to welcome you in Paris for the Virbac 2022 Full Year Results Conference and Webcast. Hosting the call today, Manuela Rodriguez, Investor Relations, and my colleague Sandrine Brunel, Head of Corporate Communication. We will be joined by Sébastien Huron, our Chief Executive Officer, and Habib Ramdani, our Chief Financial Officer. Before we begin, all the slides and financials are available at our corporate website, and you will have the possibility to ask, for those attending virtually, questions through the chat. It is now my pleasure to turn the floor to Sébastien Huron and Habib Ramdani.
Good afternoon. Good morning to all of you. As usual, we will start this presentation by sharing a quick summary of our 2022 results before going into more details on the financial dimension of what we have published. I will hand over to Sébastien, who will cover more of strategic elements and a few more qualitative elements regarding our results. First, on the sales, we have posted another very good year with a strong organic growth of 9.6% at constant rates. This performance has been driven by all of our regions. We have also benefited from a strong momentum of our key ranges, as well as a very nice contribution of some of our new products that have been launched more recently.
To a lesser extent, we have also had a slight inventory effects at the end of the year linked to the anticipated price increases. This has translated nicely into the increase of our EBIT adjusted, which increases by EUR 6.9 million at constant exchange rates, leading to 15.4% of EBITDA ratio at constant rate, which is a 15.3% of EBITDA ratio to sales at real rates. You may remember that last year we had posted a 16.3% EBITDA ratio, and the degradation from 16.3 to 15.4 is essentially linked to the R&D over investment of around 1 percentage point of revenue versus 2021.
At constant R&D level, we have even had a slight increase of our EBIT adjusted ratio of 0.1 point at constant rates, despite the impact of the inflation on our cost base. You see that we benefited from a strong gross margin contribution in value. This has been driven obviously by our sales growth. However, our gross margin has been lower in % of revenue compared to last year, again, essentially linked to the inflation impacting our cost of raw materials. We have also had a higher level of expenses in value, even though relatively stable in % of revenue.
This is linked to the rebound on commercial expenses following last year, which has been compared to 2021, which has been impacted by COVID-19 restrictions. Finally, on that slide, regarding the Forex impact, you see that we have had a very positive Forex impact on sales, very favorable. We have added EUR 50 million and it translated also nicely on EBITDA with EUR 6.5 million more of EBIT adjusted. We continue to go down the profit and loss statement, our net profit has increased, moving from EUR 115.7 million in 2021 to EUR 121.3 million in 2022 at real rates, essentially impacted by first the higher level of sales and related EBIT adjusted increase.
We've also recorded non-recurring expense linked to a one-off depreciation of some trademarks that are no longer in use for EUR 3.3 million. This obviously has no cash impact, and that has been compensated by lower financial expenses when comparing 2021 with 2022, and I'll come back to that later on. The cash situation of the group continued to be positive at EUR 79.4 million versus EUR 73.8 million at the end of 2021. This is a EUR 5.5 million increase or even a EUR 20 million increase at constant exchange rate and scope. We have generated a free cash flow of EUR 46.5 million.
It is down compared to last year, to 2021, and essentially linked to the working capital, and I will comment that later on during that presentation. Very quickly, our net debt on EBITDA ratio remains very favorable with a negative ratio given our positive net debt situation, obviously. Before going into more details for the top line, I will go very briefly on that slide just to remind you of our guidance 2022, the last guidance that we have shared. You see that from an actual 2022 perspective, we are globally very much in line on the three dimensions: sales growth, EBIT adjusted, and net debt. Let's go a little bit more in details regarding our sales performance.
We have generated EUR 1,216.2 million of consolidated sales, which is a 14.3% increase at real rates. As I mentioned earlier, we have had a very positive exchange rate impact in 2022 compared to last year. We have had a 9.6% increase of our top line at constant rate, which is significantly ahead of the market in 2021, which, as you know, has decelerated during the year and is at around 3.5%. We have again performed much better than the market. Let's have a look at the sales evolution and where the growth is coming from when we look at our different region and their contribution to the growth.
We have generated EUR 100 million more of sales in 2022 versus 2021 at constant rate. EUR 20 million is coming from North America. That has performed quite well on all of our product ranges, on nearly all of our product ranges, including the dermatology ranges, the dental, the specialty, as well as a nice contribution from the products that have been launched more recently, Clynical Intrafungol in 2021 and pet food and farm animals products in late 2021 and early 2022.
Europe has added EUR 26 million, which is a very nice, around 6% growth, when we compare the two years with a nice contribution from countries like U.K., France, Italy, Spain as well, and a good, a very significant contribution on the companion animal segments for all of those countries. Finally, rest of the world has added more than half of the growth of the group during the period with EUR 56.3 million more of sales. Let's have a look where those EUR 56 million are coming from in the rest of the world region. We had two region, Pacific and Africa, Middle East, that have contributed close to 20% growth during the two periods with countries such as Australia that has had an excellent performance.
Beyond the very good performance of our teams and product, we have also benefited from some positive weather condition that has helped to sustain a very strong demand in both Australia and South Africa as well. If we look at the Asia region, we had a 10% growth in Asia with a very strong contribution of India, where, as you know, we have a leading position, an excellent work that has been done by our teams here to continue to grow, as well as a nice demand in India. On the other hand, it has been more difficult in China, essentially linked to the COVID-19 related restrictions that had impacted our performance at the time when we were launching some new products, and Sébastien is going to cover that later on.
Finally, Latin America has increased by around 6% between 2022 and 2021 with two different dynamics in Latin America for us. We had Brazil and Mexico that have had a very nice growth, continue to have a very nice growth with around 15% growth at constant rate for those two countries, with a nice performance on the farm animals segment and a nice contribution as well of the companion animal that is contributing more and more to the performance of those two countries. On the other hand, the situation has been much more difficult in Chile, where we have recorded a negative growth of around 15%, and Sébastien is also going to cover that later on during the second part of the presentation.
Let's have a look now on the sales growth by segment, starting with companion animals. You see that we have had growth in all of the segments, with pet food leading the way. Another excellent performance of our pet food segment in 2022. With more than 25% growth, we are very close to reaching the symbolic EUR 100 million milestones for our pet food segment. Specialties segment has contributed nicely as well, adding EUR 16 million with close to 15% growth. In that segment, we will have our Virbac BUSTER type of product, our key brands such as Suprelorin. We have a product like MOVOFLEX as well, our anesthetic ranges, Stelfonta products that are part of that specialty segment.
The other segment has done very well as well, you see, adding also EUR 16 million, 12% growth with our dental sub-segment that is really leading that other segment. We have had more than 20% growth within dental for another year. Antibiotics, dermatology and biologicals have also contributed nicely, respectively 4% and 9% for the biologic segment, which is the vaccines. You remember that we are recovering on that segment following our difficulties. We are still in a limitation of our capacity of production, but nevertheless, we've been able to increase it again in 2022. That helped us to post a 9% growth within that segment. Overall, we have had a 12% growth within our companion animals segment.
We move now to the second pillar, the farm animals, you see that it's bit of the same. We are growing globally, slightly below. We are more around 7% growth within the farm animal segment with parasiticides leading the growth. We have added EUR 18 million, 23% growth with obviously the very nice contribution of some countries in the southern hemisphere, such as New Zealand, Australia, I mentioned them, South Africa as well. The nutritional segment has done very well. We are reaching the EUR 100 million symbolic milestone as well. 15% growth with a very strong contribution on that segment of our Indian business. Finally, on the growth part, vaccines 8.2%.
We have a nice contribution of our ruminant vaccines, both in Latin America and Europe as well. On more of a negative side, aquaculture, with Chile, with a negative growth of 16%. Again, Sébastien will cover that later on. The antibiotics segment that is more or less flat with a decrease on our antibiotics for swine and poultry, essentially in Europe during the period. Overall, a very strong, again, year for farm animals with a 7% growth. Very briefly, the sales breakdown by region and business has not fundamentally changed, as you can see, from one year to the other. Let's move now to our profit and loss statement. I will start with the top of our profit and loss statement. The net sales, I've already covered it.
At real rates, 14% growth. The gross margin on material cost has increased also significantly between 2021 to 2022, moving from EUR 705 million to close to EUR 800 million of gross margin on material cost. However, as you can see, the ratio of gross margin on material cost to net sales has decreased between 2021 and 2022, moving from 66.2 to 65.4, and this is essentially the consequence of the inflation on our material costs due to the overall context. We also have a bit of exchange rate impact when comparing the two years.
The net expenses, however, have been more or less stable in ratio to sales from 46.6%-46.5%. We've seen an increase, obviously, of our cost base in absolute value, but the ratio has remained stable, despite the fact that within that line, we record the increase of our R&D expenses, the significant increase of R&D expenses. As you remember, we made the strategic decision to accelerate and increase the number of pro-projects that we have within our R&D portfolio. As such, we have added around 1 point in ratio to sales of R&D.
It means that outside of R&D, our net expenses have increased favorably in ratio to net sales, despite the rebound on our commercial expenses, despite the fact that we have inflationary impact as well on some of our net expenses, including transportation, energy. We've been able to compensate part of that by having a strict control of the increase of our expenses. Overall, our operating profit from ordinary activities have increased from EUR 168.9 million to EUR 182.8 million, which is again a loss of 1 point of ratio, but again explained essentially by R&D additional investments. If we continue to go down our profit and loss statement, you see that we have recorded a non-current expenses for EUR 3.3 million.
This is linked, as I mentioned earlier, to a one-off impairment on some trademarks and brands that are no longer in use. The net financial expenses have decreased, moving from EUR 8.5 million to EUR 3.1 million. This is a combination of two effects. Our net cost of debt has decreased when comparing 2021 to 2022, and at the same time, we have also recorded a negative exchange rate impact. It was less negative in 2022 than it was in 2021. If we continue to go down, a quick comment on the income tax expense. You see that those have increased, moving from EUR 43.6 million to EUR 55.6 million in 2022. We have a double effect, some one-off tax expenses in 2022.
At the same time, our effective tax rate, excluding those elements, have also increased in percentage, moving from 27% to 29%. This is essentially linked to 2 effects. A mixed effect in our country that generates the contribution to the profit of the group, including countries where the tax rate is higher than the average of the group, including Australia, for instance, at 30%. At the same time, we have also some impact on deferred tax in France. The result of all of that is a nice increase of our net results. Group's share moving from EUR 113.2 million in 2021 to EUR 122 million in 2022. Another year of growth for our profit and loss statements.
Let me come back now, briefly on the breakdown of EBITA adjusted evolution. We see on this slide, the waterfall and what are the region and function that are contributing positively and negatively to the evolution of our EBITA adjusted. First, we see the strong contribution of Europe, adding close to EUR 19 million more EBITA, when comparing the two years. The Rest of the World business as well as adding EUR 8 million. North America, EUR 3.3 million. This is including the impact of our launch cost for pet food and farm animals business. On the more negative impact, obviously R&D, which is an investment, as we've stated, a strategic investment for the future. We see the consequence of that 1 point increase.
We have added EUR 80 million more investment in R&D when comparing the 2 years. Our corporate cost as well with the impact of inflation on salary. We have also the benefit of our good results in terms of bonuses and French tax profit sharing, sorry, system that has had a positive impact when comparing the 2 years, as well as some IT investments, increase of our IT investments. Let's move to the cash flow evolution. We see the operating cash flow has increased by 9.4%, very close to EUR 230 million, compared to EUR 210 million in 2021. The net cash flow has also increased close to 8%.
Those increase of our cash flow, operating and net, is very much aligned with the increase of our EBIT adjusted during the period. Let's have a look now on the evolution of free cash flow. On that slide, we are comparing the generation of net free cash flow in 2022 and in 2021. We have generated around EUR 36 million on net free cash flow in 2022 to compare to EUR 67.7 million in 2021. It's below in 2022 compared to last year. As you can see on this slide, there is essentially one element of explanation for the decrease, which is the working capital requirements, which has increased when comparing 2022 to 2021, moving from EUR 68.5 million... Sorry.
Moving from EUR 30 million in 2021 to EUR 68.5 million in 2022. This increase of around EUR 38 million between when comparing the two years is explained by essentially two elements. The first one is our receivables that has increased significantly in 2022 at the end of 2022 versus 2021. This is explained by the dynamic of our sales during the last months of the year, which has been much better in 2022 versus 2021. It's really a phasing effect that we have here this year. The second element is also a phasing effect. It's a tax effect that we are seeing with a EUR 12 million more tax impact on the working capital requirement when comparing the two years.
Beyond that, both for 2021 and 2022, it's also to be noticed that we continue to increase our level of stock. We have added around EUR 50 million more stock last year. We have continued in 2021 to add EUR 50 million more stocks. This is linked on one hand to the increase of our activity, obviously. Inflation on our stock as well, which impact the value of our stock, and also our willingness to continue to have enough security stock in most of our production site in order to manage a situation that continue to be tense in terms of supply. We want to make sure that we have enough security stock to be able to meet the demand.
The combination of those three elements explain the increase of our stock. That obviously has an impact on our cash generation. I've already covered that. This is a little bit more details on the evolution of our net debt. The first part is very similar to what I presented regarding the composition of our net free cash flow. The last part of the graph is more the non-cash impact, and you see also the exchange rate impact on our net debt. Bottom line, we continue to have a very positive net debt situation, which has even increased by around EUR 20 million at constant rate and scope when comparing the two years. Our balance sheet continues to be very positive and favorable. And there are not that many changes when comparing the two years.
Maybe one word again on our working capital and moving from EUR 151 million to EUR 223 million. I've shared the element of explanation to give some elements to explain this growth. Again, part of it is linked to the activity, and part of it is linked to one-off elements of timing regarding our receivables and tax payment as well. The financial ratios continue to be negative due to our positive net debt situation. On that slide as well, not much has changed. The situation of the shareholding structure of the group remain more or less the same with the Dick family continuing to have around close to 50% of the shares of the group and close to 66% of the voting rights. I'm going to hand over to Sébastien Huron for the second part of the presentation. Thank you.
Thank you very much, Habib. Thank you very much, Habib. Let's have an update on the strategy execution and the perspective. We have never shared this slide with you. It's a little bit detailed, but it is in fact, one tool we have inside the company for the last 4 years. We have built the strategy of Virbac in 2018, at the end of 2018, and then we have, since 2020, communicated on Virbac 2030, which is said in other words, a transformation plan of the company. Basically what we have shared internally is, strategy is basically two questions, is, where to play and how to win.
Where to play is where do we invest our resources, our time, our talent, our resources, financial resources, and how to win. It's how we differentiate from the competition and how we make our product offer, our positioning unique. We have many project which are, listed by the bullet point, which allows us to execute quite well. I just share this slide because we think this is one of the reason why we have such a good performance, is the execution plan of the strategy we have, shared and outlined here with everyone. You have the employees, where we have worked very much on the purpose of the company. In French, la raison d'être.
On the culture side, HSE, we have worked and we are working now on the CSR program with ESG, with the creation of department now that Manuela, by the way, will oversee as a new responsible for this department to help us go to the next step. In fact, back in 2018, we have defined KPIs and measurable KPI to achieve in the CSR roadmap for 2025. Thanks to everything we did and very much helped by the COVID situation, we reached this objective way before it was anticipated. At the moment, we have decided to set up a new ambition for the next 5-7 years until 2030, and that's what we are building at the moment with the team. Great place to work, I will comment it again later.
Of course, we have many company compliance program, code of conduct, anti-corruption program and things like that. We have many activities on a transversal mode taking care of the employees. We have the same thing for the processes. At the bottom part, you can see the key processes. We try, in fact, to digitalize the company, but not to digitalize it, to simplify as much as possible the processes. The digitalization is a reason why we try to simplify the process as much as we can. You can see the ERPs, the manufacturing execution system, the same things we put in the lab, so the LIMS in the laboratory, EPIMS and things like that. Of course, when you digitalize the company, you also need to take care of cybersecurity.
We have also many programs around the security of all the digital tool we implement in the company. Once I have said that, we have the 5 pillar that we have presented in the past in a more summarized way. Where to play? You have the key countries. To make it very simple, Virbac is quite strong in all the market except China and US. China/US is 50% of the worldwide market. In these two markets, our market share is very, very small, very little. If you remove China and US, which is corresponding to 50% of the worldwide animal health market, we are quite strong.
If we want to grow much further and reach top five, top four, top three, we need to develop in U.S., we need to develop in China, and this is part of the main priority for the group. In the U.S., we have three main project, the pet food market entry, the FPA, food producing animal market entry, and a focus on the margin as we want the U.S. to be very relative, very accretive in term of margin. That goes by fulfilling the St. Louis plant. That work goes by improving our industrial competitivity. In China, we have what we call a Growth project. It's a very broad project going from R&D to eventually local manufacturing to M&A acquisition, registering new product, adding more reps, more sales force, more commercial forces. You will see that a bit later.
In species and segment, there is nothing new. We are focusing on most of the species except poultry. We are not in poultry as a strategic species because we cannot do everything, so we have decided to not be in poultry and not in equine as a strategic species. We have very key product in equine, but they are more opportunistic positioning. You see, we are in a companion animal, ruminants, aquaculture, and swine. You will of course realize that when you look at ruminants, aquaculture and swine, one word come back all the time, it's vaccines. You cannot be in food producing animal without being very strong in vaccines.
That is why, in the territory where Virbac will play mid-long term, you will see the word vaccines coming back more and more because this is somewhere where we must be stronger and invest more in the coming years in order to be a key player in these markets. How to win? 3 things. 1, innovation. We are in a market driven by innovation, so we need to differentiate our product and add more innovation to our pipeline. This is the reason why we have invested EUR 80 million more in R&D last year. We plan to do the same this year, thinking that there is a direct correlation by the number of product we have in the pipeline and the quantity of project or product that will come to the market.
There should be a direct correlation if we work properly in R&D. Adding new product early stage in the pipeline should translate into new product to be commercialized in six, seven years from now. This is a bet we do in order to generate organic growth from 2027, 2028 onwards. This of course takes time, and of course, these are bets. Innovation is always risky, and there is always a possibility of failing. Clearly, there is a correlation by the number of project you put in and the number of project that will come out. Adding new product should likely translate into more products in the five or six years from now. Doing so, we try to focus also a larger part on true innovation, true differentiated product and product that could become blockbuster.
At least we try to do that. Animal health has become very competitive, all the competitor are moving fast with their own development program, it's a question of being first to market or having market that are not changing too much. We have seen how, for instance, the dermatology market has changed with monoclonal antibodies, we see how the parasiticide market has evolved with the isoxazoline products. Of course, this is also a question of execution. We are actively looking at acquisition, of course. M&A has been historically a significant part of Virbac growth before 2015. Over the last five to seven years, it has not been very much activated, we are really looking at all the possibility.
The targets are rare, and, we are looking only at, good targets at a reasonable price. We are not in a hurry to do it. We just would like to find a good target. There are things we are looking at. There are few, options and opportunity, but nothing yet, which is very exciting or very promising. Competitiveness is a second, pillar, with innovation of what internally we can do to really be, very competitive long term. The world in which we compete is consolidating very quickly, so there are more and more consolidation.
To win in this market, you have two options: either you innovate and you differentiate yourself or, and you do not necessarily need to say or, you could say and, you have to be extremely competitive from a cost structure and cost point of view, and that means going through industrial competitiveness. We have many programs around that in this dimension. That's everything we do to over the next few years, try to reach the target 20% EBITDA on which we have communicated. Of course, the two years of inflation has done the story a little bit more complex because we had communicated on the ambition before the inflation and the war in Ukraine started. We still remain confident in our ability to reach the target 20% before 2030.
The modality being that if there is a significant acquisition or many acquisitions, that could be quicker. If there are no acquisitions, we will hope and count on the possibility to get new products from 2027 onwards or 2028, 2029, among which we expect, we hope to have some significant product, large product. Otherwise, we will have to keep doing what we do over the last few years, which is to operationally improve. That will be linked to our ability to grow the top line much faster than the cost line, cost base. If you look at the market, we are very proud of 2 things. First, over the last 5 years, since 2018, we have been growing much faster than the market.
You have the data from 19. In fact, since last quarter of 2017, we are beating the market. Every quarter, we are growing faster than the market since last quarter of 2017, more than 5 years. That's the first element of proudness. The second one is over the last 2 years, 2021 and 2022, we have the fastest organic growth in the top animal health company. Among the biggest one, we have the fastest organic growth. You don't have the data of Q4. In fact, we have the data of Q4 now, and it's 3.5. The market has been growing 3.5% in 2022. Our growth has been 9.6%.
Said in other words, we have grown almost 3 times faster than the market in 2022. It was almost 2 times in 2021. We did 18.4% in 2021 on a market who has grown 10.8%. You see in 2021, it was 18.4%. This year it's 9.6%. There is a deceleration of the market from 10.8% to 3.5%. We are still performing quite above. There is a sharp deceleration of the market. You see it's mostly linked to companion animal. If you look at the 2 graph, on the left, you have the companion animal, and this is a part which is bringing down the market. In fact, it's sharply decreasing.
The food-producing animal, it's already quite low since Q2 of 2022, so you don't have the Q4 here, but it's more or less flat. What we have seen is a decrease of the food-producing, but it's flat over the last Q3 or Q4 , where companion animal has been decreasing. You don't have the Q4 here, but as I mentioned, Q4 was 3.4% for the quarter and 3.5 for the MAT, which is a moving average over the year. When it will come to the expectation of 2023, we don't know. We just have this last point of reference of 3.5%.
Of course, in the 3.5%, you have probably 3%-4% price increase, price variance. You could expect that the volume has started to be down or flat or slightly down in a 3.5% of market growth. I have already commented most of this. I may go quicker on this. Again, we have the top animal health organic growth for the second consecutive year. We are quite proud of that. We have been gaining market share over the last five years. We are very happy to have been able to improve, even if it's only from 0.1 point. We improve the EBITDA before R&D because we consider that R&D is our choice. It's a strategic decision to increase R&D expenses. It is something we could stop tomorrow or do more.
It only depends on us. To gain an improved EBITDA ratio on the market means that our product offer is competitive as we have commercially managed to convince the customer to buy our product at the price we have. The fact to have an improved EBITDA has been an element of proudness in the context of very high inflation last year. I remember we had been hammered by the transportation cost. We have been hammered by the pet food cost. Pet food cost base has increased by 30%-40%, we have lost points of margin in pet food. For instance, we have reduced the margin of the pet food in order to protect our customer. Despite that, we have managed to maintain at least the EBITDA before R&D ratio at a high level.
Cash positive Habib commented, I don't extend myself. In term of geography, we have been doing extremely well in many geography, Australia, Brazil, India, UK, US, and many others. The only very poor performance has been in Chile. Chile has been a strong deception. China also, more linked to the macro situation as with the zero-COVID politics. The plan has been delayed, it's not a structural issue. It's more a temporary issue in China. We are not worried. Chile, I will comment it a bit later, has been really a difficult year, 2023 will not be easy neither. Virbac 2030, we have explained this is a strategic roadmap until 2030. We have 10 mainstream to transform the company. The two main are the innovation in which we have invested more than EUR 40 million.
I mentioned below EUR 43.8 million between 2021 and 2023 at a constant rate. This is a significant increase, and it's 24% more spending in R&D. We think it's the best way to utilize our cash today. There are not too many M&A targets. We are delivering very good organic growth, and we think this is the best way to utilize our cash to make the bet that we will be able to generate a productive pipeline. As I said before, of course, this will boost the sales from 2027, 2028 onwards, not before, but we are confident that this is the right way to do it. The second one is the competitivity of the manufacturing site. I mentioned that before.
We are also investing with a huge ambition on ESG and the corporate social responsibility. We have developed a roadmap, a full roadmap, with a lot of work. We have involved more than 300 people in the company to respond to a different questionnaire. We have involved outside people. We have made a different benchmark. There has been a broad internal and external stakeholder interviews. I mean, we really did a lot of things. We are going now to deploy that in 2023 and fix just after very specific KPI in order to, again, further improve on this dimension. We, again, already did that in 2018. We matched the objective. Now we want to go to 1 step further. Great place to work.
It's really important among the element of performance of the company. This is a culture of the company, the level of engagement of our employees. We are very keen in nurturing this kind of very special and very strong engagement of our employees. Great Place to Work is for us, very important. We will conduct a new survey mid-June, mid-July this year, hoping that the social context and the inflation will not deteriorate too much the overall perception. Of course, there are benchmarks. We will analyze that also versus benchmark, hopefully, the macro context will not have a negative impact. We hope that all the action that have been implemented over the last two years will be producing good results.
The digital transformation, I mentioned it before, we have deployed a new ERP in the US last year. We are deploying it now in France in 2023. We have many cybersecurity programs on the way. In terms of geography, we have a sustained growth in most countries. I mentioned it before. I don't come back on that. In terms of booster commercial programs, for the last 5 years we have selected these three booster programs: pet food, VeggieDent, and Suprelorin. You will see that over the last 5 years, we have grown double-digit on all of them. Pet food's 26% again in 2022. VeggieDent, 37%. Suprelorin, 24%. These products are becoming significant franchises for us. We are doing really well.
In term of new product launches, I should say that the first two are not product launches, they are market entry. It's a bit different. The pet food HPM wet formula in Europe and the Tulox tabs at the bottom in Europe are true launches because we have the commercial organization in place. We are very well equipped, so this is classical launches. The first two are more market entry. We didn't have a US organization for food-producing animals. The pet food, it's a new segment, a new market, so it's slow, it's difficult as expected, but it is slow and difficult. Now I would like to briefly cover the main geography so that you have a clear understanding of what happened in 2022.
First, the two main markets, U.S. and China, and then the two best performing country and the worst performing country, so that you have a very exhaustive or complete overview of our geographical performance. The U.S. have been growing more than 30% last year due to exchange rate. At constant rate it was 15.7%. That has been the best performance ever in the U.S. despite the Sentinel divestment. All the segments have been behaving quite nicely. Dentals, dermatology with Easotic following a very good growth and progressing well. The new product, Clomicalm Itrafungol, has been also performing very well. Cyclavance and of course the pet food, it's not significant, but it's still adding some sales as Evicto. We have launched the livestock business unit, which also contribute to the overall growth.
In Canada we have a very good performance. So for 2023, it's difficult to say. We just know that there is a the possibility of a slowdown, a little slowdown in term of volumes at least. We will have to see how the market behave. But we know that the vets in the vet clinic, there are some difficulty to recruit and to act. It is possible at least that the market slow down a little bit versus 2022 and the performance of 2022 has been quite strong. The inflation is impacting our capacity to improve profitability. As you know, the salary increase has been quite significant. And then all the raw material and the products also have seen price increases.
China has been a significant exception compared to what we were expecting in 2021. I thought this will be a market growing double digit this year. Unfortunately, due to the zero-COVID politics in particular and some of the decision took locally, for instance, regulatory-wise, it's more and more difficult to get product approved. We were supposed to have a third parasitic product registered, it's not yet registered. We have vaccines, which was supposed to be registered, they are not yet registered. There is a bit of delay in the pipeline due to additional requirements and list of questions and things like this from the authority. This is probably a bit linked to the willingness to geopolitically protect a little bit more the local production.
That triggers the question of should we be local manufacturing in China more and more if we want to be in China. We have two new parasiticide product, Efipo and Milpo, who have been registered at the beginning of the year. When they were supposed to be launched, it was a confinement. People could not go outside. We have slowed down our recruitment process for the reps, and you will see that we are starting now to do what we were supposed to do last year. We have moved from 20 reps, 20 commercial sales force to 66 by year-end. At the moment we are 46, we plan to add 20 more this year, and we will end up with 66 reps, which is 3 times more than we had 2 years ago.
We expect that with the 2 new parasitic product plus the additional sales force, we will start to see the double digit materialize and significant growth and market share gain in China in the coming 2-3 years. We are very positive about China. The market has been quite strong, and it was historically, if you look over 25 years, it's 20% over 5 years. Of course, last year has been complicated, but over the last 5 years... I'm talking companion animal. I'm not talking swine and African swine fever, but talking companion animal is 20% growth. We expect the market to support us nicely, and we have the vaccine we hope that will be registered and launched soon, and then the pet food that will be launched late this year or early next year.
All that combined with the additional sales force should trigger a double-digit growth in China. Among the geographies, we have been really performing very well, Australia and India. Australia has been growing close to 25%. India, EUR 15 million, close to 15%. In both countries, a really, really good execution. Australia has been helped by a very strong market, linked to the rain, the restocking of the cattle, price. All that has been a positive, but also due to the very good work of our team locally, who has historically a culture of key account management and have been able to be awarded the top animal health supplier for 2022 with a large group over there. All that has helped us perform very well in Australia. In India, we are number one.
Commercially speaking, we have a very good mastery and we are improving in different dimension on supply and the work with the CMO locally. We are also at the moment launching the pet food, and the start seems to be quite nice, quite strong, so it's a bit too early to judge, but at least, we have some nice order coming in in pet food where we are at the moment launching in India. Chile was the exception of last year, the bad news. It was 15% decrease at constant rate. First and foremost, the main reason is the first line, the loss of formalin sales since July. Basically, we have a distribution agreement.
A few years ago, I talked about that to you, and I was worried about the fact that the distribution agreement was going to expire in 2023. We had renewed the agreement until 2028, so it was secured, and we were quite happy. We had also informed you that. Unfortunately, the registration approval is made by the ministry, which we call the SAG. But there is another authority, DIRECTEMAR, who is responsible for more the impact on the environment and ask some studies from time to time to renew a kind of license. And the study performed by the owner of the dossier of the product, of the registration dossier, has been performing the study in a human CRO, apparently not exactly according to the standard of the process of the vet CRO and the requirement, and so they lost the license.
Losing the license, we lost the product sales. It was not due to a negligence or a fault on our behalf. It was the owner of the dossier who had this issue. The consequence of that is a loss of the distribution, we lost many million dollar of sales, and that was a nice margin product for us. It has a huge impact on Chile. We are of course, working in order to try to recover these sales sometime this year. At the moment, nothing is yet guaranteed. The license has not been recovered yet, we work on different alternative to be able to come back. We lost significant sales in antibiotics.
The market in antibiotics has been decreasing in Chile by 60% over the last 5 years in tons. Sorry, our sales have been decreasing by 60% over the last 5 years in tons. We have significantly reduced our exposure to antibiotics. We even plan to maybe exit over time this category. Where we would like to focus is on vaccines, unfortunately, even there we have not performed last year. This is due to a resurgence of SRS. SRS is a local pathology in Chile. In fact, our main competitor has a vaccine, which is a modified live vaccine, who seems to work nicely at the moment, and they are bundling the vaccine, so it's more difficult for us to sell the classical combination vaccine because of this bundling. We are investing in R&D, we have hired very good people in R&D, and we are investing strongly now in order to bring new vaccines. Again, this development take time, so it will not solve the year for 2023. We expect a complex and difficult year ahead of us. We keep resilient and doing what we have to do in order to bring new vaccines and create value, mid, long term. In term of pipeline, you have all the details here.
Basically, the last time we shared that with you had 2022, and you did not have 2026. Just to explain, 2023, some of the project have been anticipated in 2022. That's probably also why we have a good year in 2022. Some of the projects have been launched in the last quarter of 2022 instead of being launched in 2023. Sometimes we are capable of earning or winning 1 quarter versus what we plan when we are at the late stage of the registration, and we normally put a buffer of 1 quarter when we share the information with you. If everything goes right, we can go 1 quarter before, so that's what happened. We have some sales that you had in the previous template for 2023, which have moved to 2022.
For the rest, it's mostly the reverse that happened. It's a little bit of delayed in the R&D program. In R&D, you work on a best case scenario where you have your scheme of studies, and you expect them to perform, and then you go to the next stage. When you have a bad study or bad results, but you will repeat it or you stop the project. You will be sometimes exposed to delay or bad news because of course this is a pipeline assuming that the product will the most likely scenario, and even if it's most likely scenario, sometimes it does not materialize. The example of that is the Caligus vaccine you see at the bottom.
The Caligus vaccine was among the biggest project we had internally in term of market potential, assuming it will work. We knew it was a high risk, high return. High risk because parasiticide vaccine is very rare. We have the experience of CaniLeish, huh? Vaccines are designed to work against virus. They are designed to works against bacteria. Against parasite, which are multi-multicellular organism, it is very difficult. You have very, very few vaccines against parasites in the world. That was a huge bet, but that was a bet to not pour parasiticide product in the water and to have a very strong product from a ESG also perspective. Unfortunately, after three very positive results in labs, I mean, in a lab condition, it worked three times.
When we went to the sea in field condition, in real condition at sea for the registration dossier, it didn't work. It didn't work past the minimum threshold we needed. The project had been stopped. That explain why in food- producing you see a lower number for 2026. In term of perspective, We have a limited exposure to Russia and Ukraine. We mentioned that before. We don't have any affiliate over there, so the sales have been down this year in 2022 significantly. We of course have not engaged at all in this aspect, so the sales have been suffering, but it's just few million EUR. What we want to share with you is more the significant inflationary impact we see. Last year, the impact on salary was not. In 2021, sorry.
The impact on salary was not so strong. In 2022, sorry. The impact on salary was not so strong. We have a much higher impact on salaries. We estimated around 6% across the world. This is 6% in France, for instance. Electricity, we have been covered in 2022, so we had no impact in 2022 for the gas and for the electricity. We have an impact, a significant impact in 2023. We have of course the pressure on supply cost and cost of certain component. Also pressure from the CMO. When we are with CMO, they are increasing their price very significantly. That's also a reason why we will try to re-internalize some of the production we have externally to not suffer so much from this cost pressure from the CMO.
Anyway, many aspect putting pressure on the cost base that will force us to be very disciplined in term of pricing and manage the P&L as best as we can in order to keep the trend of the last few years. That bring me to the last slide, which is a guidance for 2023. The guidance is 4%-6% growth at constant rate and scope, assuming a normalized market. I say that because it's very difficult, I know we say that for 2 years, but it's true. With the ups and down of the market, it's very difficult to know what the market will do. We have assumed a flat market in volume with a price around 4%, we expect the market to be around 4%-5%.
If the market is around 4%-5%, we expect to do 4%-6%. Of course, if the market is declining because the volumes are very light or going down, then this will put additional pressure on us. If the market rebound and is much stronger, we will see. At the moment, the assumption is 4%-6%, hoping the market will normalize. I remember, recall to you that it was 3.5% last year with the normalization the last quarter, but with negative volume, huh, probably. EBITA adjusted, it's 13%-14%. Thinking that we invest one more point in R&D, that's very important. We over-invest in R&D one more point again.
All that bringing the net debt evolution stable versus end of 2022, but we are also with ambition to invest around EUR 11 million of CapEx. We are growing very fast, we are trying to buy some land for further development. We need to build a new manufacturing site for vaccines, for instance. We want to develop in vaccines for the next 10 years, we need to acquire some land and to make some investment in order to prepare the company on this dimension. Thank you very much. We can open the question.
Is there any question in the room?
Good afternoon. Thank you for this exhaustive presentation. A few questions, if possible, by markets first. Can you comment a little more on U.S. contribution and the ramp up of U.S., if we can foresee some trends and the rate of occupancy probably of the St. Louis manufacturing sites? That would be the first question. On China, can you help us consider the ramp up as well in terms of also of prospects? What can we foresee as a contribution maybe in 2, 3 years? The pace of registration seems to be difficult, so maybe can you comment on the go or no-go decision regarding a manufacturing site? When should it be, and how much, if there is an investment to do?
U.S., 3 elements in the U.S. First, the classical organic off of the classical companion animal product. There, we would like to add new products, more new products. We work hard in doing so. We have some launches. I will say that the growth has been quite nice last year. Difficult to answer the question the way you ask it because it's on one part linked to the market evolution, on the other part is more about gaining market share. We don't have a breakthrough innovation. We don't have something huge or new coming to the U.S., so I expect it to be gaining market share, so still correlated to the market, okay. See the market. We should beat the market, but it will be correlated to the market. That's for the first part. The second part will be pet food. Pet food we are very much below the radar at the moment. We are not managing to get to where I would like us to be. Again, I knew that. I share that to the team, to the commercial team, and I told them it will take probably 5 years. The question is how do we start after 1 year? Because the 5 years will be the same no matter where you start. I was expecting to start much stronger anyway. Sometimes, when you have a little bit of success in cluster or in certain places, it will then ramp up a bit quicker. That will take also a few years.
I don't expect to see it in 2023, but it's one way to go much faster. If pet food starts, it will help. The last but not least is food-producing animal. It's deceiving because we had a lot of product coming in the pipeline. They have all been a little bit delayed. Now we are fighting with tylosin, for instance, is one product. When you go against Zoetis and all the others with one product, it's a bit complicated. When you have the full range, it's much easier. We still expect to have a full range of product or large range of product, broad range of product, but not full. That will be helpful. At the moment it's delayed. Here again, it depends at whether you look at 2023 or you look at 2025 and whether it's 1-year vision or 3 years vision. Again, we are still very positive about the US. There is so much to be done. We have many things in the works. We have many things running in parallel. We also look at M&A from eventually. Voilà. At the moment there is nothing near breakthrough material that will make a difference in 2023. That's why I share the perspective being prudent at the moment after the year of 2022. We had a very strong finish in the US. With a very strong finish, we may have a slower start in 2023.
That's for the U.S. For China, we have started already to work in a local workshop, small manufacturing workshop for pet care, so non-regulated product in order to have a quicker and easier access there. That's already in the works for one year already. One year we work on it. Maybe in two years from now we will be able to start a small production locally with partners, with our own workshop. That's for pet care. Maybe we'll have a partner, a CMO partner for two or three pharma products. The big question will be: What do we do in vaccines? We are exploring, but we have nothing defined at the moment, and that will take time because all these are very time and resource consuming.
We have a very lean organization, so we don't want to over put too many resources for something that will not yield results short term. We look at it. It's not a big problem yet. Yes, there are more and more questions. Yes, there are more and more delays in registration, but there is no interdiction, and we are still confident that we should get the vaccine registered before I don't know if it's end of this year or end of next year, but we still expect it to be registered. We have many things to do in China because with Milpro, AffiPro, the pet food, and 1 or 2 more products coming, we have like 4 or 5 products to launch. With 40 reps more, we should be able to perform very much. I expect it to be double-digit for the next few years. It's small today. To your question of the contribution of China, it will take a bit of time before it really add to the group. It will take some time. Brazil was 15 affiliate of the group like 4 years ago. It's top 8 now. Some country managed to do it.
Any other question? Christopher Pell or...
Thank you. You are a leader in India. Could you please tell us a little bit more about why you are leader in India, and can we expect the development of our industry of India as in China, for example? Is it only production animals or also companionship animals?
Okay. I will share some of the recipe, but not all. The first thing I will say not to share all the recipe is that in fact, I believe we are leader because when we acquired the GSK Animal Health business unit back in 2006, we have been able to free the team from any corporate pressure and let them develop by themself. These people were just amazing. They were great, and they have done a fantastic job being empowered and being trusted by us. One of the thing that makes the Virbac culture unbelievable is this words of freedom, trust, and empowerment, which create a level of engagement which is way above what you could see in the industry. That's what happened in India. I think the recipe of the success was there.
It's true that now we are really big. To your question, it's mostly cattle for us, but now we are launching pet food, and we have starting to have a significantly nice companion animal business, so it's developing. I don't expect it to grow as quickly as it grows in China. Yes, I think India is posed to be one of the biggest market in the world. It was last year, I have not checked in 2022, but the year before it was 11th biggest market in the world, but we don't have all the local players reporting, so probably it's top 10 animal health market in the world. Normally, it should be top 5. I expect it to further develop. Yes, I think that the companion animal market will also further develop very quickly. Maybe not to the extent of China or maybe a bit behind China, but I expect to see it as a, as a nice market for us.
Good afternoon. Thank you for the presentation. Congratulations on the results. I have two quick question. The first one, at the end of the Q1, you mentioned that you had a good performance that was caused by the massive stockpiling by the consumer that were scared of price increase in the start of 2023. Now that we are close to the end of the Q1, do you have more insight on the impact on the sales in the Q1? The second question is, most of the growth of the company might be linked to your ability to increase the price of your product in 2023, since the market might have a slower growth. How confident are you in your ability to make the price increase?
I will start with the second part because, last year we talked about price increase between 4% and 5%. We were at 4.5% in June. We are 4.7% in October. We finished at 5%. In fact, we have been proud of being able to execute. We were then finishing in the high end of what we were saying to the market. We finished at 5% last year. It was way above expectation. We have planned for the same kind of increase this year, you're perfectly right. It's difficult to imagine that we will do that every year. At the same time, inflation and the context should help, but it's difficult because if all the competitors are doing +3% and you do +5%, you reach the point in time where it becomes complex. To be honest, I think we are among the best to in executing there, and I would like it not to be the case. At the moment we are confident. That's the answer on the price increase. But you're right, it's a big part of the of this growth. We have planned between 0%-2% of volume growth in our assumption, and the rest was price increase. We'll see whether the volume will be negative or positive and how this thing will unfold.
I can-
As far as Habib answer.
Yeah, I can take the second one. Regarding the inventory effect, so it's not a massive one. We said a slight inventory effect at the end of the year linked to the price increases. It's difficult because obviously we don't have all of the data to measure it, but we think we would still have been at the top end of the guidance without that effect. It's also difficult to really measure what it will be at the end of the Q1, because it depends at the level of stock at the end of March of this year. It's true, we've stated that we could have an impact on the first trimester, obviously. It will phase out during the full year and we have not changed our guidance. Sébastien stated, it's still 4% to 6% for the entire year.
What happened is that there is a base effect on the Q1 versus last year. There is this strong price increase, which some of them has been anticipated, that has also compounded the effect. The last but not least, we launched some of the product I mentioned in the Q4. You have many effect that will of course make it. We lost the formatting product in July last year. In the base effect, you have all this taking to that. Voilà. It's too early, we are going to publish the Q1 soon.
Mid-April.
Good afternoon. Could you comment on the size of the florfenicol products? Are you confident you will be able to get it back on track during second part of the year?
Confident being, above 50% or below 50%? I have no true conviction on the ability to get it back. We are working on it, I don't know, I will say, maybe 50% chance to get it back in one way or another.
Above five and below 10.
One question on inflation. You have shared with us what is embedded in terms of wages for 2023. Is it possible to share what is the embedded effect of inflation on the rest of the cost structure? I'm thinking notably on gross margin and cost of goods or any other significant line of expenditure that should be relevant. Another question on M&A regarding valuation and interest rates. Have you seen a change in the seller stance regarding the interest rates hike? Probably one point on launches for 2023. How should we think about the fluidity of your launches and the impacts we should see on organic growth for 2023? Thank you.
Can take the first one regarding inflation. It's complicated to give one answer. Obviously, the impact of inflation is very different depending on the countries. Some of them has been more impacted. It's also linked to the type and nature of the contract that we have, obviously. What we've shared is some of the big impact or significant impact on energy. For instance, it's half a point of profitability that we've lost only linked to energy with EUR 5 million more. Sébastien mentioned the salary increase impact in France, which is a good portion of our cost base, obviously, at 6%. On the rest, as I mentioned, it's a mix of several, but it's definitely a in terms of assumption, one of the highest impact of inflation that we've seen recently. No surprise with that given the context.
Maybe slightly above 6. I forgot the other question. The pipeline launches, I think there is no specific indication of any change there. It should be according to expectation. One of the things we measure, for instance, is the vitality index of the company, which is the proportion of sales coming out of the product being less than 3 years, and this index is flat, above 10%. Flat being, if we keep performing every year in the same way as a ratio of sales, which mean as the sales go from EUR 800 million to EUR 1 billion to EUR 1.2 billion is not a bad performance. Above 10% of our sales are coming from product less than 3 years old. That's the vitality index, and we have seen it more as flat. Of course, we like it to improve, but it's difficult. At least it does not degrade over the last three years. That's one part. I expect it as planned at the moment for 2023. Nothing special.
Valuation.
We don't see anything. There are a bit of inertia on that. I mean, First, there are not too many targets. Someone was mentioning to me this morning that the targets being not very numerous, they still won't expect price, quite high price for this. At the moment, it's slowing down in term of number of dossier and things like this, but not in term of valuation yet. This being said, I still expect that the inflation rate going up will probably put pressure on the balance sheet and of the company will have a lot of debt. I still expect to see more things in the coming two years. There are a bit of inertia, so it takes a bit of time. We are patient. That's also why we don't give too much dividend, to keep the cash in case an opportunity will come that we will be able to seize it. Sandrine.
I have two questions. Online, we have 56 person being connected. How do you explain that 2023 sales guidance means a performance in line with the market despite 5 years of overperformance? Is it cautious or is there any reason behind that?
Two reasons for me. The first one is we have a very strong finish of 2022. The base effect for us should be more unfavorable than others. What I mean by that is we grew 14.3% last year or 9.6% at constant rate. We are comparing 2023 to a very good year. That has been the best ever. I remember that we just passed the EUR 1 billion mark, the EUR 1 billion mark in September 2021 on the MAT, and in end of 2022, we are EUR 1.216 billion, I mean, EUR 1.2 billion. Okay.
The trees don't go to the sky, there will be a point in time where it becomes more and more difficult to be outperforming everyone. That one, the base effect, and the fact that we have had a really, really good performance. The second one is, we don't have any specific breakthrough launch this year. We don't have any specific new product. We had Clomicalm, Itrafungol that help us. We had a few things that was quite evident. We still have it, we are launching pet food in India. We are launching pet food in China. We are in the second year of pet food in the US. All this should create traction. I'm not saying we should not beat the market.
I still expect that we are working hard, very hard to beat the market again this year. I guess that our colleagues and competitors are doing the same. We don't have a clear evidence that we will beat the market no matter what. We will do everything to do it again, and there is no reason that we don't do it, but there is no guarantee we do it neither. At this stage, it could be logic that we'll be more or less in line or slightly above market. 'Cause again, we say 5% and we say 4%-6%, so.
Okay. Thank you, Sébastien. The second question is very technical, very specific to IFRS. We decided with Habib to contact Cyril and to tell him that we will answer directly.
Okay.
I have no additional questions so far. It's 10 to 4, so perhaps it's time to close the session. Boss, if you agree.
If there is no more question.
No more questions. We have come to the end to the session.
Thank you very, very much.
Thank you very much.
Thank you.
-for your attendance, and for those attending virtually. Thank you so much. Bye.