Hello, everyone, and thank you for joining our 2022 interim results presentation. I'm Said Darwazah, CEO and Executive Chairman of Hikma, and I'm joined here with Khalid Nabilsi, our CFO. I'm really excited to be back with you today to take you through our results for the first half of the year and update you on our strategic progress. I will kick things off and then hand over to Khalid to run you through our financials in detail. We are presenting very solid results today. Clearly, the first half of the year has been challenging, with the impact of COVID lingering, and competition increasing, and the effects of inflation beginning to be felt across the business. I'm very pleased that despite this, we are reporting a set of results that demonstrate the resilience of the group.
In a tough environment, the differentiation of our business, our commercial and operational strength, and the hard work of our people have enabled us to maintain a good supply of our medicines to customers and patients across our markets. Group revenue in the first half was flat on last year, and group core operating profit was down by 4%. This slight decline in core operating profit reflects lower profits in generics, which were mostly offset by double-digit profit growth in both our injectables and branded businesses. We continued to generate a good level of cash flow from operations in the first half, and our balance sheet remains strong even after closing the Custopharm and Teligent acquisitions and completing a $300 million share buyback. This slide highlights the diversification of our group revenue and profit. We are committed to investing across our three businesses.
When one business is facing headwinds, the others always compensate. As is the case this year, with strong growth in injectables and branded helping to offset the tough environment in generics. Our injectables business is our largest business today, representing 44% of group revenue and 61% of group core operating profit. It continues to have the highest margins of our three businesses, achieving close to 39% core operating margin in the first half. Injectables and branded make up more than 70% of group revenue and more than 80% of group operating profit. These two businesses are performing well and have a very positive outlook for the future. Of course, we continue to see good potential for our generics business, but today, in this tough environment, it is the smallest part of our business.
I think it's worth pointing out here that while our generics team is having a tough year, they are doing a great job managing the challenging operating environment that is impacting companies across the entire sector. They have remained focused on operating efficiency and cost reduction in order to minimize the impact of the broader market conditions. I believe the team's extensive industry experience and our world-class manufacturing facility in Columbus are among the best in the world. While generics profitability is lower than we would like, and today we are revising our outlook for generic margins to be around mid-teens for the full year, this is still a good margin for the industry. Our business is not only well-diversified business across revenue and profit but is also diversified in terms of capabilities and geographies, which provides us with a very strong platform for growth.
The group strategy that we have been delivering for the past 4+ years remains unchanged. To focus on the foundation, develop our product pipeline, and inspire and enable our people. As we look forward, we need to continue to focus on the foundation in each of our businesses. This means leveraging the investments we've made in products and manufacturing to make sure we are getting the most out of the very high-quality assets we have. Pipeline, of course, is also critical and key to our future success. We will also continue to leverage our high-quality R&D and manufacturing operations to tap into growing markets. Of course, we have the financial flexibility and firepower to accelerate growth by leveraging our strong balance sheet. Let's take a look at each of our businesses in a little more detail. Starting with injectables.
Our injectables business, with its extensive portfolio, high quality and flexible manufacturing operations, and strong commercial relations, is truly differentiated. I'd like to point out that this is also our first business to reach $1 billion in revenue, which it did last year. We are the second-largest supplier of generic injectables by volume in the U.S. and have grown our portfolio over the last decade from around 50 products to more than 130. In addition to products, we have been making significant investments in recent years in all aspects of this business in order to ensure that we can achieve strong future growth. I've just mentioned the acquisition of Custopharm, which is already contributing to the strong injectables performance in the first half.
Through this acquisition, we have added further expertise in the development of complex and first-to-market generics, which will help us build a more differentiated pipeline. The acquisition of Teligent's assets gave us an entry into the highly attractive Canadian injectables market, a side of the business we look to grow over time. We are also entering new markets organically, as we have done in France in the first half. Continued investment in manufacturing capacity has earned us a reputation as a high-quality and reliable supplier, helping us to form strong partnerships with customers and enabling us to step into shortage situation to ensure continuity of supply of important medicines to patients.
Investment in manufacturing is also crucial to support our growing portfolio, and we are regularly adding new lines and capabilities across our global operations. This also helps us take on strategic CMO business, which has proven to be a successful strategy to date. We are also making a great start with our compounding business and have recently completed successful FDA inspections at our Dayton and Cherry Hill sites, which will help in obtaining the remaining required state licenses. While this business will be a small contributor in 2022, we have an ambition to become one of the leading suppliers of compounded products in the U.S., and we will work to build this business gradually over time.
I haven't yet touched on all the investments we have been making in the MENA region, where we are building local injectables manufacturing facilities in Egypt, Algeria, and Morocco, expanding our product portfolio and making good market share gains, especially for our biosimilar products. As you can see, we have a lot going on in this business, and the prospects of continued growth are excellent. Our branded also offers some very exciting growth opportunities. We are well established in MENA, having operated there for over 40 years, and are now the fourth-largest pharmaceutical company in the region. We are present across 18 markets with an extensive local manufacturing footprint. We also have a strong and experienced sales force of approximately 2,000 people marketing our products throughout the region. In 2018, we tiered our markets to focus on those with the largest potential.
This strategy has been paying off, and our tier-one markets, such as Saudi Arabia, Egypt, and Algeria, are performing well. We've also been working on strengthening our two-tier and three markets, which have been good contributors to growth recently. I'm pleased to report that Morocco, previously a tier-three market, has now become a tier two as we see good growth and great potential in this important market. We have a broad product portfolio comprised of products that we develop in-house, our branded generics, and innovative brands that we license from global partners. It is the strength and breadth of our commercial and manufacturing capabilities, combined with our local market knowledge, that positions us as a partner of choice in the region. Key to future growth for this business is pipeline development and execution.
We expect to continue to sign new partnerships for innovative products, and we have also strengthened our R&D capabilities in the MENA region. Today, we have a high-quality pipeline that we expect will deliver a steady stream of attractive products in the coming years. For some time now, we have said that we are shifting concentration away from anti-infectives, historically our top-performing products, towards more differentiated products, including treatments for chronic illnesses. Today, I'm happy to say that the investments we have made in building a pipeline of more differentiated products is paying off. In the first half of this year, approximately 80% of our growth was driven by medicines used for chronic illnesses, with chronic medications making up around 56% of our portfolio today, up from 43 in 2016.
Like the injectables business, the growth prospect for the branded business are very strong, and we are expecting the momentum we are currently seeing to continue into 2023 and beyond. Now let's look at generics. I know that the performance of the generics business in the first half, as well as the outlook for the full year, is disappointing. The market is very challenging. Price erosion continues to be severe, and we are increasingly seeing volume erosion, which we expect to continue into the second half. This year is going to be a tough year, especially when compared to the very good year we had last year. Thankfully, our business is strong enough to weather this bad storm.
We have a state-of-the-art facility in Columbus and an experienced management team that has been focusing on increasing efficiencies and reducing our cost base in order to manage the industry headwinds. We are now guiding to solid mid-teen margins for the full year, which is very respectable in this industry. More importantly, we expect the business to return to growth next year. Key to this, and to growth beyond 2023, is the launch of more differentiated products and the development of our specialty business. We continue to add more differentiated and specialty products to our portfolio through both internal R&D and business development, and we are investing in our commercial capabilities to support these efforts. Our specialty products are attractive because they have higher barriers for competition and they command higher margins, which will make us less susceptible to competition and price erosion.
In the near term, we have exciting launch opportunities which will support generics' return to growth. These include generic Xyrem, with a date-certain launch of January 1, 2023, and Ryaltris, which we expect to launch in time for the spring allergy season in the U.S. We will also look to leverage our state-of-the-art Columbus manufacturing facility to bring additional growth through strategic contract manufacturing, a strategy that has been proven to be successful for our injectables business. We have sufficient capacity to support both our own and third-party business. This is a great way for us to maximize returns on our invested capital, and the higher volumes will help us to remain as cost competitive as possible. Of course, to support growth plans and accommodate an expanding portfolio, we must continue to invest in high-quality manufacturing capabilities. We are very good at this.
Year in and year out, we have consistently invested around 6% of revenue in CapEx. This spend is split between maintenance CapEx, which is crucial for ensuring we maintain our high-quality standards, and expansionary CapEx, which is used for upgrading our capabilities, increasing automation, as well as expanding our manufacturing and warehousing capacity. These investments have enabled us to build a broad manufacturing network of 32 brands across 11 countries. This includes world-class facilities in the U.S., in Columbus for our Generics business and in Cherry Hill for the Injectables. These U.S.-based sites differentiate us from some of our competition and allow us to respond extremely quickly to U.S. demand fluctuations. We also have a rapidly expanding injectables facility in Portugal that we believe to be one of the largest sites for production of lyophilized products in the industry. This type of specialized capacity is in high demand.
At our Columbus site, where we are the number one supplier of nasal sprays in the U.S., we also have two dedicated lines for dry powder inhalers and a dedicated facility for high-potency products. In MENA, we have advanced capsule filling machines, bilayer machines, and capability to produce high-potency and oncology products. Importantly, we have local facilities in all of our key MENA markets, each with a range of capabilities. These are just a few examples of what our investments have brought us to date. I believe that our manufacturing strength is one of our greatest assets and a key differentiator for us compared to our peers. Switching gears, I now want to focus a bit on another lever of future growth, our pipeline. To drive further growth, we need to make sure we consistently have new products in our pipeline.
We have been working on improving our R&D efficiency, the quality of our filings, and strengthening our R&D centers. Across the group, we are increasing the complexity of our pipeline through the introduction of new technologies. We aim to have a portfolio and pipeline with an increasing number of more complex products, such as specialty 505(b)(2)s, patent-protected products, inhalation, nasal, and biosimilars, which all have a higher barrier to entry. We are also utilizing our internal API capabilities to introduce vertically integrated niche products. We are leveraging IPRC, an extremely high-quality and world-class contract research organization, to support all our businesses in their R&D, bioequivalence, and clinical studies. If you look at our priorities for each business, in Injectables, we will continue to expand our conventional product portfolio. We're also focusing on new therapeutic equivalents, looking at new dosage strengths, forms, and ready-to-use products.
We are working to develop differentiated products with higher complexity, such as long-acting injectables, suspensions, and products that use complex devices. In Branded, we will continue to focus on growing our potent product portfolio with higher barriers to entry, such as oncology products. We are also focusing on introducing first-to-market and first generic products in our tier-one markets and introducing lean practices within our R&D lab to increase output. In Generics, we will continue to look at increasing the complexity of our pipeline by focusing on higher barrier-to-entry products, complex products that leverage our nasal spray, inhalation, and high-containment manufacturing capabilities, and of course, on building our specialty portfolio. Around 75% of our submissions in 2023 and beyond will either be a Paragraph IV ANDA or competitive generic therapy-eligible filings. This slide provides a snapshot of what we currently have in our pipeline.
For U.S. Injectables, we have a total of 93 products in our pipeline, 45 of which are already filed with the FDA. These products are across different forms and include bags, pre-filled syringes, powder fill, and pens. For Branded, we have a total of 142 products in our pipeline, 79 of which are filed. These products are high value and focus on oncology and chronic therapeutic categories such as cardiovascular, respiratory, and central nervous system. For Generics, we have a total of 31 products, 11 of which are filed. These include nasal sprays, respiratory, and oral solid products. As you can see, our pipeline is becoming increasingly interesting, and we have a clear plan for further product development. I will now hand over to Khalid to take you through our financials.
Thank you, Said, and hello, everyone. The group has shown a resilient first half performance, which is a testament to the strength of our underlying business, supported by the breadth of our product portfolio, unique manufacturing footprint, and recent acquisitions. We saw a strong performance in Injectables and Branded businesses, which have helped to partially offset the decline in Generics. As a result, in the first half of the year, group revenue was flat at $1.2 billion, and group core operating profit was down 4%. Core EPS was $0.921 per share, down from $0.965 in the first half of 2021. The board is recommending an interim dividend of $0.19 per share, up from $0.18. Now, let's have a deeper look at the financial performance of each business.
Starting with Injectables, the Injectable business delivered strong growth in the first half of 2022, with revenue up 9%, driven by our own products and by the recent acquisitions of Custopharm and Teligent Canadian assets. In terms of organic growth, Injectable revenue grew 5%. Looking at each of our regions, in the U.S., revenue grew by 14%. Following the impact of the pandemic, we are seeing normalized demand with elective surgeries gradually returning. We are benefiting from our broad portfolio of more than 130 products, as well as our extensive and flexible manufacturing capabilities, both of which are helping us to respond to market demand and address shortages.
We are also benefiting from the contribution of Custopharm, which we closed in April. In Europe and the rest of the world, revenue was up by 4%, reflecting good demand across our portfolio of own products, including recent launches and a contribution from the Canadian Teligent acquisition. In MENA, revenue was down by 1% on a reported basis and up by 1% on a constant currency basis. This was primarily due to the weaker sales in Lebanon and Iraq, which were partially offset by successful new launches, as well as good performance of our biosimilar products as we continue to launch into new markets and grow our existing market share. We expect performance to be weighted towards the second half of the year.
Injectables core operating margin continues to be the highest of our three businesses, with a margin of 38.8% in the first half of the year. This reflects an improvement in product mix and the contribution from recent acquisition, which more than offset an increase in R&D and sales and marketing spend as we invest for future growth and enter new markets and geographies such as France, Canada and our new sterile compounding business. In our Branded business, where we continue to benefit from our established presence in the MENA region, we achieved strong performance in the first half, with revenue up 6% on a reported basis and 9% on a constant currency basis. This was driven by good performance across most of our markets, benefiting from our increasingly diversified portfolio of high-value treatments.
For example, we saw good demand for chronic medication in Algeria, Morocco and Iraq, which performed particularly well in the first half. We saw a good performance in the private sector in Saudi Arabia, driven by demand for products used to treat diabetes and MS. We expect government tenders in this market to increase in the second half due to timing. Branded core operating margin was 21.8%, up from 20.1%. This reflects an improvement in product mix, which more than offset the negative impact of foreign exchange related to currency devaluation in North Africa. As a result of this strong performance, we expect profit to be more evenly spread out this year when compared to previous years. Turning to our Generic business. Revenue was down by 18% in the first half due to the challenging competitive environment in the U.S.
We experienced low double-digit price erosion and mid-single digit volume erosion through the first half, and a slower than expected ramp-up in recent launches. Generics core operating profit decreased by 42% and margin reduced to 17.6% as a result of the erosion, as well as higher sales and marketing costs as we continue to develop our commercial capabilities to support a growing specialty portfolio. We need to ensure we are building a pipeline of differentiated products in order to deliver long-term sustainable growth. In the first half of the year, we continued progress with our pipeline projects and invested $69 million in core R&D. This represents 6% of revenue and is in line with our strategy of spending between 6%- 7% of revenue on R&D each year.
Of course, we also need to make sure we are investing in the infrastructure to support a growing portfolio. As you can see on the slide here, we consistently invest between 5%-7% of revenue on CapEx, and we are guiding to a similar level for 2022. In the first half of this year, our CapEx spend was $63 million. In the U.S., $23 million was spent upgrading equipment, expanding packaging areas, and adding new technologies at our Cherry Hill, Dayton and Columbus sites. In MENA, $29 million was spent primarily on adding new injectables manufacturing capabilities in Morocco and Algeria. In Europe, we spent $10 million adding new high-speed liquid filling lines in Portugal, as well as upgrading equipment in Italy and expanding warehousing in Germany.
The group continues to generate a healthy level of cash flow, with operating cash flow of $169 million. The reduction compared to the first half of last year reflects the decline in operating profit and increase in inventory levels to ensure continuity of supply. The group's total debt increased to $1.6 billion, reflecting an increase in our financing as a result of our recent acquisition of Custopharm and Teligent Canadian injectable assets, as well as the share buyback. Before I turn to our guidance for the full year, I just want to touch on the impact of inflation. In the first half, we started to see the effects of the global inflationary environment in certain parts of our business.
While we have been managing this where we can by keeping a tight control on cost and looking at operating efficiencies, we expect to see a further increase in cost due to inflation in the second half of the year. At the moment, I estimate the impact of inflation on the group for the full year will be around $20 million, and this has been factored into the following guidance. For Injectables, we continue to expect revenue growth to be in the mid- to high-single digits and core operating margin to be between 36%-37%. This reflects the strength of our underlying business, supported by our broad product portfolio and flexible manufacturing capabilities, as well as the contribution from recent acquisitions, which will help us more than offset an expected increase in cost in the second half due to inflation.
For Branded, given the strong performance in the first half, we now expect revenue to grow in the low single digits on a reported basis. On constant currency basis, we expect Branded revenue to grow in the mid single digits. We expect core operating profit to be more evenly split across the year. This is an upgrade from our previous guidance. For generics, given the persistent challenges of the U.S. generic market, we now expect revenue to be in the range of $650 million-$675 million, down from $710 million-$750 million, and core operating margin to be between 15%-16%, down from around 20%.
We expect the group core net finance expense to be around $68 million, and the core effective tax rate to be in the range of 22%-23%. We expect group capital expenditure to be in the range of $140 million-$160 million. This wraps up the financial section. I will now hand it over to Said for some closing remarks.
Before I close, I want to take a step back and look at Hikma's strong track record of revenue and profit growth. I have been with Hikma since the beginning, and it has been a pleasure to see the company grow from a small local player in MENA to a multinational company we are today, with over $2 billion in revenues. Since 2017, our revenue has grown at a CAGR of 7% and core operating profit at a CAGR of 13%. We have also delivered an average return on investment of around 17%, demonstrating our ability to allocate capital and generate value. We have consistently returned cash to shareholders through regular dividends. Today, we have a solid foundation with an expansive product portfolio and broad pipeline of new products.
Our manufacturing footprint provides us with the capabilities and flexibilities to meet the growing needs of our customers and patients. We have an excellent quality track record, making us a reliable provider of critical injectables, branded and generic medicines globally. With all this, we see a great amount of differentiation and potential for Hikma, and our ambition is to continue expanding to meet the growth trends you see here across all three of our businesses. While we are seeing some industry headwinds in one division, we must not lose sight of the high quality business Hikma has become. I am hugely excited by our potential, and I'm confident in our outlook for the future. I want to give you an idea of how we see the business developing over the medium term.
We expect injectables revenue growth to accelerate, driven by our investment into adjacent growth areas such as compounding, our entry into new markets, and an ongoing commercial R&D and manufacturing strength. We are confident that revenue growth in our branded business will also accelerate, driven by our expanding portfolio and focus on chronic medications, combined with our manufacturing, R&D, and commercial expertise in the MENA region. Finally, our generics business will return to growth in 2023, driven by new launches, including Ryaltris and generic Xyrem. By executing on our strategic priorities, we'll further diversify and transform our business in order to achieve long-term sustainable growth. Thank you.