CEO Riad Mishlawi and CFO Khalid Nabilsi. Before we start, I'd like to remind you that any forward-looking statements or projections made by Hikma during this call are made in good faith based on information currently available and are subject to risks and uncertainties that may cause actual results to differ materially from those projected. For further information, please see the principal risks and uncertainties section in Hikma latest annual report. I'll hand over to Riad for some opening remarks before we go to Q&A.
Thank you very much. Good morning, everyone. Maybe a few words summarizing the half, the first half. I believe we had a strong half. We have a strong revenue growth of about 6%. That's driven by volume growth across all segments. All the segments are doing well as expected. I think the big story and the most impressive part of it all is that we had revenue growth of 12% in the injectables division. Revenue growth means that we have good demand on our products, and that's very, to be honest, it's a good indication for us that all the investment that we're doing in expanding our facilities and increasing our capacity will all bring in good results. That's happening as we speak today. The growth did not happen in one region. We have 26% growth in Europe, and that's something also very impressive.
MENA 16% and MENA has been doing this year- on- year for the past few years and continues to do so. Of course, in the U.S., we have a growth of 8%. That's all driven by new launches, driven by volume increases, and of course, the Zenith portfolio that we had acquired middle of last year. The branded revenue is up 4%, and the branded division has been doing really well year- on- year with not only good growth but also very stable margins, very stable profitability. That's a division that, you know, everybody questions whether, you know, do the geopolitical problems, if we are going to be impacted at all. I think it's doing right the opposite. I think the political instability is bringing us new business. This business has been doing really, really well. Of course, we're doing a lot to feed it in new products.
We're doing a lot of BD, and, as you know, we acquired a few products like the Takeda product last year. Finally, the generics RX division. The revenue is, you know, about flat, broadly flat, I would say. That's a division that everybody was worried about for a while. I think what we did this year, pretty obvious, that it's very stable, poised for growth, good R&D team. We're doing a lot in R&D. Of course, you know that we had announced a big CMO contract that I think will be going into full throttle in a couple of years, starting with next year. We're doing a lot of investment in that division, and I think the fruits of all this investment are going to be pretty obvious. I think there's a lot of good news.
There are some slight, I would say, unexpected headwinds, especially in the margins of the injectables. This is why we dialed down the injectables slightly. The good thing about it is that this is temporary. This is not something that will last. It's mainly driven by the effects, the strength of the euro. As you know, some of our cost in the injectables is in euro, and we pay it in euro. That has a slight effect. Of course, the uncertainty and the unclarity created some inflationary costs like shipping, some of the tariffs that we would have to pay, some of the inventory, and so forth. That's also added to that. It didn't really affect it that much, but we wanted to make sure that we're very transparent. We'll see how things are going.
We also want to be realistic that there are some headwinds, and we have to kind of face them. As a whole, I think we are reiterating our group guidance, and that's what's important. We continue to expect that the group revenue for the year will be between 4% and 6%. Core operating profits in the range of $730 million- $770 million in 2025. The slight adjustment that we did with the injectables is exactly just to reflect what's happening, what has happened, and that has been accounted for right now. I think that will be behind us from now on. You can see the branded. There's no FX headwinds in the branded. This is usually where the FX is, but in this case, it's not. It's in the euro, something unexpected.
As you all know, at the beginning of the year, everybody thought that between the euro, there would be parity between the euro and the dollar. It's really the opposite has happened, and that will screw our numbers a little. I just wanted to make one point, that if I was looking at our share price this morning, we had hit 52 low this morning. Three months ago, four months ago, I believe we were at 52 week high. I believe that where we're sitting today, we have a much, much stronger business than we had three, four months ago. Everybody was worried about, for example, about the RX business or Rx generics division, as we called it. Everybody was worried, what are we going to do with it? A lot of suggestions. Should we sell it? Should we get rid of it, some of the parts?
We had all of that. What we have today is a very, very strong division delivering. We have a great R&D setup there. We've got a leader that understands how it's run. We signed up a great contract manufacturing contract that will stabilize a lot of the income and give you a lot of profits, something that is predictable. It's going to come. Also, we are submitting very critical products such as the epinephrine nasal spray. We have transformed this division from the time when we used to sit there two years ago and say, "It's going to bring between $100 million and $120 million." You know, it brought in $190 million last year. Is that what the $190 million last year? We're anticipating to bring in $170 million this year. It's doing well. It's got a great future.
If all the products that we are submitting are going to get approved, that will be an incredible division. Despite all that, there is a lot of spending on R&D, focus on R&D, and still, we're able to come up with numbers that have exceeded what we had said before. You look at the branded division. Year-on-year growth, year-on-year stable. Profitability is high. It has increased significantly from three, four years before, and it continues to do so. We're signing a lot of contracts. We're signing a lot of BD contracts. As I said before, this political instability in that region is making a lot of the big branded companies that operate in that region come back to us and say, "Hey, you're local. Do you understand?
Why don't you just take our products?" We have been very successful in signing a lot of those big products into our own and adding to our portfolio. You can see that from the numbers. Injectables, I mean, I used to be, as you all know, head of the injectables. I can tell you, I know all the injectable competitors that work with us and our peers in the same markets. We are double or, you know, much higher in the margin than anybody there. Everybody wonders how we are able to get the margins. Let me remind you that we get this margin while we are operating in the U.S. About 60% of our products of the injectables are made in the U.S., and the rest are made in Europe. We're not in low-cost areas. We're not in India. We're not in China.
We're not in any of those low-cost areas, and we're still able to get margins that are higher than everybody else competing with us, and without any sexy ones. We don't have big products. We have generic, simple products, but we're able to squeeze so much out of those that we have. We run very efficient operations, and the efficient operations are continuing to grow. We have Bedford. We're investing in Bedford. That is going to be an incredible facility with technologies that are very unique in the U.S. and in the injectables area. We're investing in Cherry Hill. We're adding more lines. There are a lot of investments that are happening all across all injectables. We built new facilities in North Africa. We doubled the capacity and localization in Italy. We are breaking ground for a very sophisticated state-of-the-art facility in Saudi Arabia.
A lot of investment is happening in this division because we really believe in it, and we believe that we can do better than anybody else operating in the same field. It's very confusing to all of us how we see, you know, going from 52-week low to 52-week high. Is it the reaction of what happens on the day, or are we evaluating the company based on what they have in the future and how they're growing and what the prospects of the future is? If it is about the future, I can assure you that the future of this company is more positive than it's ever been. We are looking at how we are going to be organized to be more effective. We are absorbing 11% more or $11 million more in R&D than we have in previous years. We're still able to get numbers.
We're still able to get an EBITDA number higher than any of our peers. We are operating, as I said, in all, most of our products are coming from expensive territories like the U.S. and Europe, and we're still able to manage for a profitability like that. We increase in R&D by almost 20%, as we highlighted, year- on- year, and we still deliver. We believe in R&D. We believe that this is our future, and we believe in growth. We are not going to cut R&D so we can get the numbers, and everybody is, you know, we need to invest in the future, and R&D is one of them. I think the reason why RX had suffered for a while is because the R&D investment was limited. If we want to grow, we need to invest in R&D, but not only invest in R&D, invest in smart R&D.
You all know what we had, what the people that we had brought in, very R&D focused, very science focused. They know, they know not only how to sell the product but also how to develop it and how to make it. We're counting on those people. We're counting on all of the organization. There's a lot more to do, and I think the results show it. If the FX impacts come in because the euro was unexpected and you have to dial down 1.5% on your margins, it's sad to see that we have been, you know, we're looked at as, you know, or, you know, the reaction is exactly there. That's how the market goes, and that's what we need to do. We're open for questions.
If you would like to ask everyone for the, sorry for interrupting. We just had, on. Sharing with your questions. It's our process, for instance, to ask a question to inform one. Continuing this advantage, what would you do to be able to keep your high margin? We all know there's more and more competition coming on, so how would you maintain your high margin at this field?
I think the formula is simple. We mastered that formula. I think the high margins didn't come only last year. For the last 14 years, if you look at the injectables, maybe 15 years, I haven't looked exactly where, what we had been delivering, 34%+. We even have some years that we got to 40%. It's not a formula that is strange to us. It's a formula that we follow, and it's been working well with us. I think even now, we think that we can even do much better in terms of organizing R&D better. This is something that we were not very strong at. We've recruited now people that understand this very well. We reorganize our R&D much better. We have a nice center in Zagreb now that we had acquired with the Zelia acquisition that we are going to capitalize on.
We're going to reorganize it and, you know, spend some money on it. We believe that the money that we are going to spend in R&D is going to come back much more than ever because of the location where we're spending it and because of how we are organizing ourselves. We're putting synergies together. We're identifying the synergies across all divisions. We're doing a lot in that area because we do believe in R&D. Basically, when it comes to revenue, when it comes to margins, I don't see there's anything different. In fact, we used to get those margins without any, as I said, sexy product or big, high margin or whatever product that you want. If it was a product, we had simple generic products, and we were able to get that margin. However, today, we do have that product.
We do have Civasan that is very unique, protected for the next 10 years, only one in the market. A product that has huge potential. There's 30- 40 tons of vancomycin being sold in the US, and we are the only one that has ready-to-use bags. We have a patent on that one that will stay with us for quite some time. We do have unique products right now. We have a lot of 505(b)(2) and Alzovan . If we were able to get that 35%+ margins in the past, we should be able to even do better now.
Thank you. Hi. Beatrice Fairbairn with Berenberg. In the release date, you noted that group outlook takes into account the impact from tariffs and related inflationary pressures. Would you be able to kind of quantify this, which areas it's impacting most, and anything that you're kind of doing to offset this?
Okay. Thank you for your question. I really need to clarify the tariff scheme. The impact of the tariff is not that big today, especially in our P&L. It might be in the balance sheet because, you know, as you know, if you buy raw materials and it stays in your warehouse, it's in your balance sheet, not only P&L. The impact on the P&L is not that much. However, there is an impact nevertheless. Tariffs are today, we are all anticipating what will happen. We're all trying to predict what will happen. Things are changing daily, as you all know. We know that there is some tariff on Europe. We don't know if generic drugs are going to be included or not. Considering all of that, our U.S. presence is bigger than anybody else.
In the future, we are going to be, you know, if tariffs are going to be severe, I think we are in a great position. If we're actually going to put that 50% in India, you know, most of the companies in the U.S. are getting their products from India. They're Indian companies. Many of them are sourcing their products from India and China. We are not. We have also less risk in terms of the tariff. Today, the tariff is there. It's not big. It's not affecting us big time. We have only 5% of our product totally in the whole group that comes from China. In the U.S., it's even much less than that. It's not going to be a big number, especially from China. From Europe, we don't know what's going to happen. If it does, it's going to be a slight small number.
We still don't know. If you compare us to the industry, I think we're sitting on top of everybody else because of the way that we're structured. These indirect impacts, like increasing shipping costs because of the tariffs, it's that kind of shipping cost increase. You see, as Riad mentioned, very minimal impact for this year in tariffs. Combined, maybe it's around $6 million, $7 million impacts in shipping, inventory. Tariffs, it's not a significant amount that affects us. The significant, like why we've come down on our margins, it's mainly the FX. When you have, when we get the guidance, the euro was to the dollar 1.04. Today it's 1.116. If our cost based in euro is higher than our euro income, this will have an impact, a translational impact. Translates to be EUR 100 million to dollar. It was $104 million. Today, it's the same EUR 100 million.
It's $116 million. This is the impact. This is why we brought our product. I think what's important to investors is when they look at some downgrade to see if this is structural or not. This is not a structural downgrade. This is not a structural impact on the company. This is something that we're reacting to the environment around us, something that we cannot control. Shipping had gone up. At one point when there was this tariff war that's happening between China and the U.S., there were no containers. Everybody wants to ship now before the tariffs go in effect. You pay two, three times more if you want to ship your product out from overseas coming in here. That eventually will have a small effect. You add those little small things together. It becomes the number. It brings you number 1%, 1.5%.
The important part, again, is this a structural problem or is it a temporary problem? It is not, definitely not, a structural problem. Even that there is something that we did say also in the announcement about product mix. I want to make that point. As you saw, the increase and the growth that we're having, a lot of it is coming from Europe, 26% Europe. So 26% at a lower margin than the U.S. The growth is great. Also, if you want to maintain your margin, you should not be growing that much because it's so and so, but you are growing in areas where there's less, less margins than we do in the U.S. Adding to that the fact of Xellia. Xellia, as you know, it's bringing in, is this a public number of what Xellia is bringing in? Yeah. Can we say what the number is? 50 million.
Yeah, roughly. Yeah, roughly around $50 million. A little bit less than that. These products are coming from third party while we are getting our facility ready. As we all told you, we have the facility that is ready to take all those products in and more and have room to also grow in these technologies, like we said, thick bag sealing and LIO. It does take time. Right now, we're depending on third party. You depend on third party. You are not going to make the very big 35+ margin. You are going to make less. You have to pay for the third party. You have to pay for shipping. All that is going to disappear once you have your facility up and going in Bedford, which we are anticipating to do in 2027.
All of the pressures that we have in our margins today to be more than double our peers, it will even do better in the very near future because of what we're doing.
Thank you. It's Kane Slutzkin from Deutsche . Just on the injectables piece in April, you'd sort of spoken about new entrants coming in, two of your larger products. Just wondering how it's looking there. How have you reacted, whether it's sort of from the pricing or just volume? Just on the CMO deal, I think you mentioned something around 26. I was sort of under pressure as 27. Just want to confirm that. Where in clinical development is that asset if I may ask?
You're talking about CMO?
Yeah.
Okay. The deal CMO. What was the first part?
About the product mix, injectable one.
Yeah, about the product mix. I mean, this is our business, right? This is the business that we have. You have to anticipate. You have to look ahead. You know that competition is going to come. You know that some products are going to be, you're going to lose some margins. You are going to have to pick them up some other way. This is going to happen. Yes, unfortunately, this happened at the same time. Two of our big products got competition. Then we had to dial in on the market share and some of the profits. It did impact us. We made them up in other ways. The impact of this is, yes, it does go up and down, but not so significantly because our portfolio is one of the largest in the U.S. We have 175+ molecules in the U.S. in injectables. Some will go down.
Some will go up. We just have to be able to be paying attention to the market, being there before everything happens. We did anticipate those coming in. We did anticipate that we were going to lose market share. We'll see how we are going to, how these competitors are going, how reliable they are. Then we act. We've been in this business for quite some time. We know how to deal with competition. Yes, this is one. The other one that actually affected us is the fact that the growth in other areas was with a lower margin. This is what the product mix was going to happen.
As far as the contract manufacturing, we all told you, I think this is not new to your view, that there's going to be a big sizable investment in our facility by our clients to facilitate the ability to produce for them the high-technology product that we are going to be making for them. This is going on today. We're building. We're adding equipment. It's significant. It's significant value that we're putting in that facility, that they are putting in our facility. That shows a lot, the trust that a big branded company would do, coming in and putting hundreds of millions in your facility to make it ready. The trust your quality program, the trust your ability to technically be able to produce, and giving you a very huge critical product for you to make for them. It tells you about what they have found.
These guys, they're very picky. They're a branded company. They get the best of the best. They hire the best of the best, and they come to you and see you. They were able to give you a big critical product that I think says volumes about your ability and about your capabilities as well. This is what's happening right now. I think we are building right now. We start next year with slight volumes. Towards the end of the year, we expect that will increase significantly. It all depends on the approval time. We are anticipating sometime next year. It's not our product. We really don't know. We know that that's a forecast that we're getting, but we're very excited about starting as soon as this product gets approved. We're praying that it gets approved. Their success is our success. We're looking forward for this to go to full throttle.
The first question comes from James Gordon with JPMorgan. May we ask a question?
Hello. James Gordon, JPMorgan. Thanks for taking the question. One question was just about injectables margins. You trimmed the margin this year. I think you may have partly answered it. Is it fair to say the majority of the trim is because of FX? How much of it is FX versus the other factors that you talked about? Connected to that, should we extrapolate the margin comments or guides for this year to next year? Do you think things will be different next year? That would be the first question, please. Second question would be GLP-1s. It sounds like your liraglutide is going reasonably well. Are there any thoughts on whether you will or won't do SEMA? It sounds like you're not doing SEMA in Canada next year. Are you going to do it in Europe and U.S.?
Maybe the third one would be, we heard about Hikma RX with the generics pipeline quite a bit at the event a few months ago. How quickly do you think that's going to start coming in? Do you think we're going to see a significant boost from generics pipeline coming through next year? Or do we need to be a bit more patient?
Thanks very much. Do you want to take the margin part?
If you look into the margin, when we gave the guidance, in mid-35, as Riad mentioned, we anticipated in that when we gave the guidance that there would be some price range on some of these products. Maybe it's slightly higher than what initially was. You bring it to the low end of our margin, but the main impact is coming from the FX. You could assume around $13 million, $14 million, $15 million coming from FX of Europe, and the $6 million coming from the other quotes related to indirect impact of tariffs, shipping, inventories. This is where we got into the 32%, 33% margin you see today.
As far as GLP-1, as you know, liraglutide is, we've started this one. We're the only one in the market, after Teva, that introduced authorized generics. We introduced ours, 25th of December, I believe, on Christmas Day last year. Done well. Today we just have one competitor that had been added to this group. The product is doing well. We still are, you know, we're still selling it, although I think at a lower, lower, lower price. We had managed to also renegotiate this transfer price to us, so our margins are still healthy.
As you know, there was a lot of compounding happening in the GLP-1 last year. A lot of people that wanted to get to the Semaglutide, they didn't have to buy it straight from the manufacturer or from the, they compounded that product. The reason why is because they were allowed to because the product was on shortage. Since then, the product is not in shortage, and compounders are not allowed to do that anymore. The Semaglutide went back to the high price that it had always been, which gave the opportunity for liraglutide. The difference is, if you don't know, the liraglutide is very similar in indication to the Semaglutide, except it's daily while Semaglutide is weekly. Of course, for convenience, everybody would prefer to go to the Semaglutide. Because of the cost now, especially that you can't get it compounded, we're seeing demand increasing on the liraglutide.
Whether we are going to the Semaglutide I think it's still patented. There are a couple of countries in Europe that will be, the patent will be expired next year. I think Canada will be one also, and a few countries like Brazil and this. By and large, I think most countries will still be restricted by patent. The thing about patent that maybe people don't understand, it's not about selling the product in a patented country. It's about not being allowed to even make the product if it's patented. I can't make the product in Portugal and sell it in Canada because it's not patented in Canada. You can't even make it in Europe because it's patented in Europe. It's not about only where you sell. It's also where you make. This is not something that we're entertaining and doing.
We have some deals for the MENA market to bring in this product. I don't have an exact date for you. In MENA, we are the largest, the strongest local companies, and we always are looking out for interesting products like these. We do have a deal that we are trying to finalize, or we should be introducing this product. I don't want to say when. It's depending on, we are actively looking for it. I think the last question was, I think that's it, right? Oh, I think the question was about the RX.
Sorry, in the East. I think given you get a boost, you've been investing more in generics or RX R&D. When does the boost start coming in? Is that a 20-page story, or do we need to be a bit more patient?
Yeah. As you know, I always say our visit is like Christmas trees. You plant a tree today so you can sell it in seven years. You have to anticipate. You have to be patient. Nothing that you do today is going to get you a result tomorrow. You have to wait. In our case, in RX, it's exactly what we're doing. The good news is we can tell you what we're submitting. We did tell you that we are submitting a very interesting product like epinephrine nasal spray. Very unique product. Extremely valuable one. Very easy to administer. A huge demand and potential on it. We had done all the studies successfully.
We had a lot of conversations with the FDA, and we're anticipating submitting this product towards the end of this year, which means that if you give it 18 months of the regular review time, if it all goes well, I think we should have it within that range of time. That will give a big boost to the RX. It's not the only product that we're submitting, but this is the product that I can talk to you about because we made that public. I can tell you that bringing Hafrun in, that was her focus. She revamped the entire R&D department. She brought in new people. It's a lot of focus. We're working on interesting products. We're submitting a lot of products. I think the result of all that is going to be apparent soon.
While we're doing this and spending more in R&D, we're still giving great results for the RX. It's not that it's suffering because we're taking away the money and putting it in R&D. We're putting more in R&D, significantly more in R&D still. We're coming with a really, you know, high teens, high teens, profitability margins, operating profits. It's doing a lot better than we ever thought. The contract manufacturing effects that is going to bring to it is definitely going to make this division extremely interesting.
Thank you.
You're welcome.
Thank you. The next question is coming from Victor Slotch with BNP Paribas. You may proceed.
Hey, thanks very much for taking my question. You can start with my exam. Maybe first on tariffs. It's fair to say that concerns for the EU pharma have meaningfully eased since Liberation Day. On the flip side, it's fair to say that it's now broadly assumed that the EU pharma manufacturing capabilities will have to be rebalanced overseas. In this context, just wondering if you've seen any significant uptick in terms of interest for your CMO offering. This was my first question. On U.S. compounding, I think you frame it as the key driver for the long-term and your $5 billion 2030 guidance objective. Should we expect at some point that you will be able to refine the exact contribution from this business to top line and potentially the PUMA guidance that would help us to better capture this opportunity? Finally, on liraglutide.
Last quarter, you added that the expected end of Semaglutide compounding could be a tailwind for your liraglutide generic, as it would represent a low-cost option compared to the FT lease price of [COVID step down] . In the meantime, we've seen that compounding is still very much alive, capturing something like 30% of the Semaglutide markets. We've also seen Lilly and Novo going for direct-to-consumer cash channels. Just wondering if you still believe that it could materialize as a tailwind for liraglutide and with Semaglutide generics at some point. Do you still think that you could drive growth with Semaglutide even though compounding is still very much alive? That's all for me. Thanks very much.
I'll try to answer some of them. I'm excited we'll help you with some. Let me start with the tariffs. Again, it's not clear for us how tariffs are going to come about. We heard that there were some agreements with Europe. We heard there are 15% there. We really don't know if that includes the generic drugs, if that includes something else or excludes. This is still unclear for us. We're trying to clarify it. We're trying to talk to the government to see if, but unfortunately, the confusion is not only limited to us. Everybody else, a lot of people are confused.
We hope that this will be cleared soon. Then we'll see if this is going to give us any effect or not. Even if it has an impact on the industry, we are well positioned, as Riad mentioned. We are well positioned in terms of our manufacturing plants in the U.S. The Bedford expansion that we have, even for the injectables business, will be ready in the coming, let's say, 18 months. We'll be able to benefit from that.
We have built this to make sure that the local companies operate in the local market. A lot of the U.S. revenue that we get is generated and born in the U.S. If there are tariffs and if it's a free tariff, as I said before, it will affect us. It will affect all the industry. It will affect a lot of those peers that we're competing with. A lot of them, I think, the effect on us will be there, but it will be minimal if you compare it to our peers. It's something we're looking for. I think the government is looking at the tariffs, and they are careful about how they are going to implement it because, as you know, shortages in the U.S. are still there, especially in the injectables.
If you are going to put the tariffs, you have to be very careful not to increase that problem or create a bigger problem than that. This is why there's a lot of back and forth on this one. Sometimes we hear it's included. Sometimes we hear it's excluded. Sometimes we hear if the API is Chinese. Sometimes we hear that if you transform the API, it's not. There isn't really a great and clear definition on how the tariffs are going to be implemented. I think the government has their challenges as well, and that's why there's a lot of back and forth. As far as the U.S. compounding, our compounding business is doing great. I think we are in the right direction. A few things are happening in compounding.
I don't know if you guys are following the compounding business, but the compounding business has been very much challenged by the FDA in the last few years, last few years in particular. FDA does not want compounding to be a different business or have a linear rule than the core business. If you are doing injectables, these rules apply. They don't care if you're doing it by compounding or you're doing it aseptic to aseptic or doing it from aseptic to non-aseptic. The rules apply. In the past, when the compounding started, there were some rules that were a little bit lenient, I would say. They were a little bit more you can get away with. Right now, the FDA is coming back and withdrawing those rules. They are going to, they're putting their foot down. They're saying the way you have to act that way or else.
That created a lot of warning letters. It created a lot of people going out of business and a lot of pressure. If you look and read about compounding, you'll see a lot of our peers, even the largest, have gotten warning letters in the last two years. Fortunately for us, we are creating a compounding in the way that we learned how to do aseptic business, which is our core business. We just copied what we do but on a smaller scale. When it comes to compliance, we have probably one of the cleanest records in compliance. That's from the compliance point of view, which is very critical and a big risk in compounding. That has been put to bed. We've done a lot of investment to make sure that this is done. Of course, it's not easy when you have a batch.
We make our average batch in Cherry Hill, for example, is 1 million units. Our average batch in the compounding center is 300, 400 units. To scale that down is incredible. You have to use everything differently. You have to use a lot of manual steps. That has been now done. We've gotten all the approvals of all the states. We've gotten the blessing of the FDA. We know what we need to do. From last year to this year, we had tripled the revenue of this center, but it's way short where we need to be. Our aspiration, we think that we can be the leader of the compounding business in the U.S. We need to do it slowly. This is a very critical one. You don't want to make a mistake. In this industry, trust is very, very important. Your client needs to trust you.
They depend on your product. You're not going to stop an operation because, you know, the bag of fentanyl did not come in. You cannot do a heart surgery that you're going to make $600,000 from it, and now, because of $20, you're going to be canceling that. That they don't want. You do it once, and they will cut you out. You need to build your trust. This is exactly what we're doing. It's very much proven by the fact that we have tripled the revenue there. We're short from our goal. We think our goal would be big. We think that we should be, in the next two, three years, we should be really hitting the hundreds of millions, hopefully $100 million soon. There's a lot of automation that has to happen. We have equipment that are on order for this center.
I think there's a lot that we learned in the last three years, what we need to do. We thought it would be very typical and similar to the business that we have. It's not. It's the relationship, the way that you sell, the way that you make, the way that you inspect it. All of that is different. We all know that now. It's only going up from now on. Compounding, I'm happy about. The future is bright. We are really implementing our strategy exactly as we designed it. Finally, the liraglutide and the Semaglutide question. I'm not sure if you know that the Semaglutide will not be off patent until 2031. In some cases, 2030. It's not in the near future. It's not going to be at a time when you are going to have liraglutide and Semaglutide, both generic and both competing.
Of course, Semaglutide, when it comes to generic, liraglutide will have a very weak case for, nobody is going to take a daily product when they can do it weekly. Who knows? By then, you should take one maybe every year. This industry is advancing so much. They say that the oral is going to come up now, very effective. This industry is moving. Today, we know that liraglutide is doing well. Semaglutide is patented and with a very high price. We're managing to get some revenue out of liraglutide. That's all we hope for. We're managing this as the industry evolves and as the competitors come into the market.
Thank you. Our next question is coming from the line of Sebastien Jantet with Liberum. Let me ask a question.
Good morning, Just checking, you can hear me all right?
Fine to.
Okay. Just three questions, if I may. First of all, just on the branded margins, obviously, you have quite strong margins in the first half. You're guiding to margins for the year, sitting at around 25% or so. You've obviously got stronger growth coming through in the second half. I'm just trying to understand what are some of the drivers that are going to impact the margins in the second half in the branded division. The second question is just around the injectables business, and you've called out in the past, Castellane and Posofthrone as products where you've seen some competition. I know you said you've reacted to that. I'm wondering if you could just let us or give us a sense of whether that pressure is ongoing or whether you're seeing that pressure beginning to stabilize. The last question was just on vancomycin. I'm just wondering if you could give us an update on the black box and whether you've had any progress on that front.
Sure. Do you want to take the first one?
I'll take the first one. The branded business, it's a similar case to last year. Last year, we had a strong weighted H1, and we delivered margin in line with what we have this year. This mainly was due to the timing of the tenders. This year is going to be similar to last year but maybe to a lesser extent. I would say the branded business is delivering an excellent performance. I think maybe it's slightly now given that there's no currency impact. Maybe this will improve a little bit on where we started initially, but it's going to be around the 25%. It's on the top end of our guidance, I would say. The injectables, the two products that we have difficulties in, or let's say we face competition in, I think we did say that in April, the Testosterone and Calcitonin.
We did anticipate people are coming in. We've been in a leading position with Testosterone for years. It's just a matter of time before somebody comes. There are seven right now, people that are in the market. For us to be able to continue the lead on the Testosterone for the past years was magical. It was only a matter of time before this is not going to hold any. It doesn't mean that we lost the entire thing. We still have it, but of course, with the competition, the prices are going to suffer. This is a very tough product to make, and that's why, and expensive to make. It's not an easy product, but the margins are very, very healthy, of course. If you are going to lose some of that margin, you have to replace it maybe with more volume or less margin.
This is exactly what we had been done. This is why you see, and this is why it's such a great indication when you see our revenue had gone up. It shows that we can replace by volume. We can replace the higher margins with medium margins but more volume just to replace the place where we had lost. Calcitonin, I would say the same exact thing. I think the product mix that we refer to is not the loss of those, the margins of those products. It's the fact that we have other geographies with lower margins growing faster than the ones with higher margins. You saw that MENA and Europe had grown at a much higher pace than the U.S. at a lower margin than the U.S. and what is anticipated.
Zelia, of course, Zelia, adding a significant revenue with healthy margins but with less margins than our organic product. With that, the combination of that really had a little bit of pressure. Not much, but we offset a lot of it. Still, we're discounting a very small number related to that. Finally, for the vancomycin, we did get approval for the vancomycin for removing the box. The new product without the box is called Tizaran now. It's going to be a branded product, patented, unique to the market. That will be replacing our product that we used to call Vanco Ready, which used to have the black box. We are in the transition in doing so. We are expected to launch Tizaran towards the end of the year.
As you know, a branded product needs to be detailed, but we are very optimistic that this product, as soon as we get the momentum going, will be a very, very big and interesting product for us. Yes, there's no black box on Tizaran . It's safe to be used with everyone, including pregnant women. Thanks.
Thank you. Our last question is from Siddhartha Modri with Barclays. You may ask your question.
Hi. Thanks for taking my question. Continuing with the last question, Pyzina was approved. From my call with Ariad, there is still some inventory left for Vanco Ready, and you would like to exhaust that inventory before you can launch Pyzina in a meaningful way. I just wanted to know how much of that inventory is left, and would this spill over into next year? My second question is on the contribution of 503B compounding and your CMO business into your $5 billion peak sales ambition in 2020, I mean, in the future. How much of that would come from these two businesses, and what would be the impact on margins? Third, if I may ask one last question, a lot of manufacturers, branded manufacturers, have been talking about DTC sales. Do you want to give any color if such a thing is implemented? What would be the impact on Hikma's generic business? Would it be a headwind or a tailwind to you?
Of course, just manufacturing. I think the third one, the manufacturing. I missed that one.
Sorry, Sid. Please can you just repeat the third part of the question? Thank you.
Yes. The first question that I asked was about Pyzina. Basically, what we were told is there is still some inventory left for Vanco Ready, and you would like to exhaust that inventory. How much of that is left?
Thank you. Just the third part. Thanks.
Yeah, yeah. The third question was about DTC sales. Like a lot of branded manufacturers have been talking about DTC sales in the U.S. What would be its impact on the generic business of Hikma? Do you see this as a headwind or a tailwind for yourself? Direct-to-patient sales is what I mean.
Yes. Okay. I'll talk to you. I'll start with the Pyzina . Pyzina today is being manufactured by a third party. The flexibility of dealing with manufacturing, with the forecast and inventory and all that, is not as flexible as if we make it ourselves. As you know, if you have a third party making it for you, you have to give them the forecast ahead of time, and you have to give them a permitted forecast. This is number one. The second thing is Pyzina and those bagged products, the label and the expiration and all that is printed straight on the bag. You have to, I suppose, not only be able to anticipate, but you have to commit to it with the label on it.
There are a lot of parts that you have to pay attention to when you put orders in, how much risk you're going to have, and how much dating you are willing to sacrifice because you're not going to make the product ahead of approval and wait until the approval happens, which we do in some cases. In this case, the expiration date is printed on the bag. If you do it before the approval and wait, you might only get a few months left by the time you have approval. The risk is big, and of course, this is not made by you, so the flexibility is not there. That's why the strategy is to get all the inventory done with Vanco Ready while we're making the change to Pyzina . This is going on as we speak.
Pyzina is being manufactured today, and we are depleting all of our Vanco Ready before we have the Pyzina out. We don't want the customer to have two types of products. We want the products to go away and be replaced by a better formulated product without a black box. As far as our goal of the $5 billion in 5 years, I think we're very much, you know, compliant with that. We reiterate that, and we think we can get that. It's not an impossible goal at all. As you see, our revenue is growing. All our divisions are striving to get there, so we have no worry about that. Now, how much CMO would the $5 billion include? It could be a significant part of our business. I cannot tell you exactly how much, but I would say it would be a lot more than what we're doing today.
I don't know if that influence is telling you much, but I really can't tell you an exact number because it depends on many things. Contract manufacturing is going to be coming. We have today contract manufacturing in our business today, as you know, today. We are adding a significant contract manufacturing, in Columbus that will be making a critical product for a branded company, as we had announced before. That will add significantly to the revenue of contract manufacturing. From the injectables point of view, as Bedford gets completed, we believe that a lot of contract manufacturers that we deal with today would want more volume that we're limited to give today because of our limited capacity, and our capacity is more working for us than the contract manufacturer. We will be happy to add more volume to them once the Bedford facility is complete.
With the Bedford facility and with the CMO in Columbus, we believe that a significant amount of contract manufacturing will be added to the business that we have today. How much of the $5 billion, how much of the compounding business is going to be in the $5 billion? I hope. I don't know. I hope a lot. That's a thing. We are working very, very hard on this business because we see there's an opportunity there. This business is not going to go away. This is a need that hospitals actually really, really need. They've been very hesitant to trust somebody, and whenever they trust someone, they get big warning letters and big compliance problems with the FDA.
The biggest leader of compounding today has gotten two warning letters in two years in a row, and a lot of other ones that had closed some facilities and hit with warning letters on others. We have been spared. We have been compliant, and we have been doing that very slowly because we don't want to get into that position. I think we are now, we built a great foundation to build a great business on. I hope by 2030, this business will be significant and doing really well. The last thing is direct business. We love direct business. I think it's great if we can do it. We're doing it, and we're trying to increase it. There are a lot of difficulties. Today, our dependency on GPO in the business is about 50% in the injectables, and the branded is a lot more when we go through the PBMs.
Direct business is difficult because of the contracts that hospitals have with the GPOs and how the business really runs. There is some compliance that hospitals need to have. If you are, I don't know, a hospital that works with a GPO, you have some commitment to be in compliance to continue taking volumes from them. They give you some credit to the volume that you take from them. With that, it makes it very difficult for them to buy directly from you. They have to go through the wholesaler. They have to go through the GPO contact. We like it. We like to increase it, but there are some difficulties in logistics of how to go about it. We do have a significant one today, though, more than our peers in direct selling to our clients.
Lastly, I would say that the compounding business is direct, and it has to be direct. By law, you cannot go to a wholesaler. It has to be straight from your manufacturer to the customer. As we grow this business also, direct sales is also going to increase.
Thank you so much.
There are no questions on the line. I'll pass the conference back over to Riad Mishlawi for any further remarks.
Thank you very much. And thanks for your questions. I think I just want to reiterate what I said in the beginning. We have a better business today than we've had three months ago or than we had last year or the year before. We had grown the business significantly. We had put the foundation to grow the business. We know that this business is not a business that the reaction or the result happens immediately. It does take time. Today, we are investing in this business. You can see how we are investing in this business. We're increasing our R&D spend. We have changed the organization and the people in the organization. We identified our needs. We identified that R&D is something that needs to be improved. We did exactly that. We brought leaders that understand the R&D. We gave them money to spend on R&D.
We created a portfolio selection committee that knows exactly what products to go after. We enhanced our BD team, and now the BD team is going beyond what we know. We're going to China. We're going to India. We're going to Europe. We're going to all where the opportunities are to see if we can bring in technology and expedite the approvals or the portfolio that we have. We have been increasing our infrastructure. We've been spending around $200 million in capital expenditure every year, and that's for a good reason. You can see Bedford facilities. Now we'll have a state-of-the-art facility in Ohio. We have Cherry Hill that we're adding more and more lines. It's extremely modern now with a lot of robotics there and making a lot of products. Same thing with Portugal. We're adding another plant in Portugal.
Our capacity is not only being built, but it's being utilized. In the injectables, our capacity is being utilized at very, very high levels. In the RX, our capacity is being utilized by us, and it will be also utilized, a lot of it, by the contract manufacturers. The money that we're spending on capital expenditure in both IT and automation and capacity and equipment, all that is going to benefit the future. It's benefiting us now. We can see the future is definitely going to be benefited, especially with the indicators that we see today. Our volumes today or our capacity today is at very high levels, especially in the injectables. Our demand is there. You can see 12% increase in top line. It shows you that the demand is there. There is no worry about where that is going to be utilized.
Our contract manufacturing demand is very, very strong. We have a lot of contract manufacturers coming to us, especially on how we are positioned. We are offering contract clients redundancy in the U.S. and in Europe. We have plants that are capable to do the same thing. If you want to have a safe product, you make it in the U.S. and you make it in Europe. You reduce your risk significantly with this redundancy. We have all what it takes for us to grow, and we are growing. We are showing the growth. You have to spend before you see a result. We are spending, and we are continuing to show good results. It is not that we are spending and sacrificing the margins. On the contrary, we're spending and we're still bringing in higher revenue, higher margins, and the top of the industry.
I looked at a lot of our peers. We hired a lot of our peers in the docs the quarter. You look at our result. Still with the downgrade, the slight downgrade that we did in the injectables, we're still on top of our, on the top of the chart when it comes to margins and growth in revenue. We think we have a good business. We think the future of the business is fantastic, and whatever we're doing today, we'll be doing it better tomorrow. Thank you, Riad. Thank you.
That concludes the Hikma interim results. Thank you for your participation. You may now disconnect your line.