Hyaluronic acid and medical aesthetics once epitomized excessive profits.
Typical examples include the listings of Huaxi Bio, Aesthetic Medical, and Haohai S&T, which not only led to a dramatic increase in the wealth of the company founders, propelling them to the status of super-rich tycoons, but also ignited the financial effect of the entire medical aesthetics industry.
However, in less than five years, these businesses, once considered the most profitable and excessively lucrative, have lost their luster and the wind has changed direction.
【Growth Deceleration】
In the past few years, China's medical aesthetics industry has experienced explosive growth.
The "China Medical Aesthetics Industry 2024 Annual Insight Report," jointly published by the China Medical Beauty Association and Deloitte China, predicts that driven by the continuous increase in medical aesthetics penetration and diversified quality demands for medical aesthetics, China's medical aesthetics market is expected to maintain a rapid growth rate of 10%-15% in the next few years, with the growth rate of injectable medical aesthetics projects reaching 20%-30%.
Among injectable medical aesthetics projects, hyaluronic acid has been the undisputed "traffic bearer." From facial contour optimization to skin anti-aging, hyaluronic acid has swept the medical aesthetics market in a short period of time with its low-risk, high-return characteristics, becoming the "standard configuration" of major institutions.
The Frost & Sullivan report shows that the global sales volume of hyaluronic acid raw materials was 720 tons in 2021, and it is expected to maintain a compound annual growth rate of 12.3% in the next five years, reaching 1285.2 tons in 2026. Among them, China is the world's largest producer and seller of hyaluronic acid raw materials, with China's total sales volume of hyaluronic acid raw materials accounting for 82.0% of the global total in 2021, with a compound annual growth rate of 13.1%.
The rapid rise in demand for hyaluronic acid has made the growth myth of the "medical aesthetics trio" represented by Huaxi Bio, Aesthetic Medical, and Haohai S&T. Since its listing, Aesthetic Medical has been known as "women's Moutai" with its high gross margin comparable to Moutai, and its peak market value reached 180 billion yuan.
However, the financial report for the first half of 2024 reveals a fact: the once glorious medical aesthetics giants are experiencing an unprecedented deceleration in growth.Firstly, Huaxia Bio, known as the "first hyaluronic acid stock," saw its operating income drop to 2.811 billion yuan in the first half of 2024, a decrease of 8.61% year-on-year; its net profit attributable to the parent company was 342 million yuan, down 19.51% year-on-year. This marks the largest revenue decline for Huaxia Bio since its listing in 2019. Last year, Huaxia Bio experienced a decline in both revenue and net profit for the first time.
Aimieke's revenue was 1.657 billion yuan, a year-on-year increase of 13.53%; its net profit attributable to the parent company was 1.121 billion yuan, a year-on-year increase of 16.35%. Although its performance still maintained double growth, this growth rate is the lowest in the past three years. Financial reports show that from the first half of 2021 to 2023, its revenue growth rates were 161.87%, 39.70%, and 64.93% respectively; net profit growth rates were 188.86%, 37.52%, and 64.66% respectively.
Haohai Bio also faces a situation of slowing growth. Its semi-annual report for 2024 shows that its revenue was 1.404 billion yuan, a year-on-year increase of 6.97%; its net profit attributable to the parent company was about 235 million yuan, a year-on-year increase of 14.64%. Although the performance has improved, the base effect behind it cannot be ignored. Previously, Haohai Bio experienced a significant decline in profits in 2022.
As the biggest "contributor" to Haohai Bio's double increase in revenue and net profit, the growth rate of hyaluronic acid products is also not as good as before. In the first half of this year, its revenue from hyaluronic acid products was 417 million yuan, a year-on-year increase of 51.3%, but this growth rate has dropped by 63.05% compared to the same period last year's 114.35%.
Corresponding to the slowdown in corporate growth is its performance in the capital market. Over the past year, the stock prices and market values of Aimieke, Huaxia Bio, and Haohai Bio have all experienced不同程度的下跌.
As of the closing on October 11th, Aimieke's market value has shrunk significantly from over 130 billion yuan at the beginning of the year to 63.981 billion yuan, and its stock price has fallen from a high of 640 yuan to 211.55 yuan. Huaxia Bio's market value is 29.797 billion yuan, a drop of 120 billion yuan from its historical peak.
Behind the collective deceleration of the "three musketeers of medical beauty," hyaluronic acid products, as the "money-making magic weapon" of the medical beauty industry, are facing an increasingly crowded market, especially with the expansion and competition among giant enterprises, leading to an oversupply situation ahead of schedule. It has also entered an era of continuously declining prices earlier than expected, thereby directly compressing the profit margins of enterprises.
Frost & Sullivan data shows that from 2017 to 2021, the average price of hyaluronic acid raw materials dropped from 210 yuan/g to 124 yuan/g, a decrease of 40.95%; from 2018 to 2021, the price of hyaluronic acid terminal products dropped from 1,557 yuan/bottle to 1,111 yuan/bottle, a decrease of 28.64%.
Hyaluronic acid used to be the "gold mine" of medical beauty giants and their basic business. From raw material supply to terminal products, these enterprises have enjoyed this huge dividend. But now, the story of this market seems to be less charming.In recent years, the overall development environment of the medical aesthetics industry has undergone profound changes. These changes have not only directly affected the performance of leading companies but have also, to a certain extent, reshaped the competitive landscape and profit models of the industry.
The industry commonly acknowledges the current state of the medical aesthetics industry chain as "the upstream eats meat, the downstream drinks soup, and the midstream can only gnaw on bones."
Upstream, manufacturers with technological barriers and brand effects, such as Aesthetic Medical and Huaxi Bio, have extremely high pricing power; downstream, channel merchants like SoYoung, Meituan Medical, and Tmall Medical charge high commissions; squeezed by both upstream and downstream, midstream medical aesthetics institutions can only survive in a tight spot, with a low net profit margin.
Data from Frost & Sullivan shows that in 2021, the average customer acquisition cost for medical aesthetics institutions has risen to about 3,000-5,000 yuan, with a net profit margin of only about 1%-10%. In contrast, some upstream manufacturers have a net profit margin of over 60%.
In this situation, top medical aesthetics institutions such as Langzi Shares, Hua Han Shares, and Yestar have successively laid out upwards, trying to break the deadlock with OEM hyaluronic acid, enhancing their pricing power while increasing their profit margins.
OEM refers to medical aesthetics institutions that do not master core technology themselves but entrust upstream hyaluronic acid manufacturers for research and development and production to gain pricing power, commonly known as "private labeling." Langzi Shares' Run Luowei and Funiwei are OEM products, while Yestar has Jie Rui, Aoxi Shi, Manfu Jia, etc.
Behind the popularity of OEM, the problem of "homogeneous high price" has become increasingly obvious, with some product prices even exceeding more than three times the price of the same registration number of the original manufacturer's product. For example, Run Luowei under Langzi Shares, its reference price on the SoYoung APP is 3690 yuan per vial, which is more than four times the price of the original manufacturer's Run Zhi No. 3.
Medical aesthetics institutions, by launching OEM products, have more flexible pricing and sales methods, expanding market supply and providing consumers with a more diverse range of product choices. While bringing substantial profits to themselves, they have also intensified market price confusion and brand trust crisis, posing greater challenges to industry regulation.
On this basis, the influx of new players is further changing the competitive landscape of the medical aesthetics market.
As a "long slope and thick snow" super track, the medical aesthetics industry, with its high profit margins, high customer unit prices, and high repurchase rates, continues to attract more and more new players to enter the field. In particular, traditional pharmaceutical companies quickly enter the market through mergers and acquisitions, agency, and other means, accelerating the technological progress and market competition of the entire industry.Pharmaceutical companies such as East China Pharmaceutical and Si Huan Pharmaceutical, leveraging their strong R&D capabilities and substantial financial investments, have introduced innovative aesthetic medical products including collagen and botulinum toxin. These have further encroached upon the market share traditionally held by hyaluronic acid products.
Taking East China Pharmaceutical as an example, in 2018, the company invested $220 million to acquire the British aesthetic medical enterprise Sinclair, swiftly securing a market position. Their best-selling "girl needle" has been highly recognized by the market since its launch, due to its long-lasting effects and significant results, gradually becoming a strong competitor to traditional filling and repair procedures.
Currently, East China Pharmaceutical, with its forward-looking strategic layout, has constructed a diversified and differentiated product matrix. They possess 40 international high-end aesthetic medical products with "minimally invasive + non-invasive" characteristics, among which 26 products have been launched both domestically and internationally, and there are 14 global innovative products under research and development.
Compared to aesthetic medical companies, pharmaceutical companies have stronger competitiveness in technology R&D, capital operations, and market promotion. This has allowed them to capture an increasing share of the aesthetic medical market and has accelerated the survival of the fittest among aesthetic medical enterprises.
At the same time, consumers' perception and demand for aesthetic medical treatments are also evolving, compelling these companies to invest more effort and resources into the development of emerging technologies and products.
Unlike a few years ago, consumers are no longer solely focused on the immediate "instant" effects when choosing aesthetic medical products. Instead, they place greater emphasis on long-term safety and the sustainability of the effects.
The injection effects of regular hyaluronic acid products have certain limitations and often require continuous injections to achieve the desired results. With the increase in product options on the market, consumer interest in routine procedures like hyaluronic acid has begun to wane, shifting towards more innovative, long-lasting, and technologically advanced aesthetic medical projects.
As the market matures, consumer spending concepts become more rational, especially with a significant increase in price sensitivity. This shift has forced aesthetic medical institutions, which previously gained high profits through high prices, to adjust their pricing strategies. Some have even engaged in price wars to attract consumers, further compressing the profit models of aesthetic medical institutions.
These changes indicate that the aesthetic medical market is no longer a blue ocean for a single product but a new battlefield that requires more innovative technologies and services.
【Searching for the Next Growth Point】Faced with the fading benefits of hyaluronic acid, sluggish self-growth, and an accelerating in-competition market, in recent years, the "Medical Beauty Triumvirate" has been actively seeking a second curve, attempting to fill the gap left by hyaluronic acid.
As early as three or four years ago, Zhao Yan, the chairman of Huaxi Bio, stated at the company's performance release conference, "We are no longer just a hyaluronic acid company; hyaluronic acid is merely our foundation." In a media interview in March of this year, she clearly pointed out, "Synthetic biology has become the next key term for Huaxi Bio."
Among them, recombinant collagen has become the main focus of many medical beauty companies due to its superior biocompatibility and safety.
In November 2022, the successful listing of "the first recombinant collagen stock" Juzhibio on the Hong Kong Stock Exchange made the market recognize the strong money-attracting ability of collagen. Financial reports show that in 2022, the company achieved a revenue of 2.364 billion yuan, a year-on-year increase of 52.3%, and a net profit attributable to the parent company of 1.002 billion yuan, a year-on-year increase of 21%.
In March of this year, Yang Xia, the chairman of "the first recombinant collagen stock" Jinbo Bio on the Beijing Stock Exchange, became the first female entrepreneur in recent years to top the list of richest people in Shanxi with a net worth of 8.5 billion yuan, once again giving the market a concrete understanding of the wealth-creating ability of collagen. In the first half of this year, Jinbo Bio achieved a revenue of 603 million yuan, a year-on-year increase of 90.59%, and a net profit attributable to the parent company of 310 million yuan, a year-on-year increase of 182.88%, with a gross margin as high as 91.58%.
Looking at the prospectuses of several listed companies, the gross margin of hyaluronic acid functional skincare/products/medical dressings is between 75%-85%, and the gross margin of injectables is between 85%-95%; while the gross margin of recombinant collagen functional skincare/products/medical dressings can reach 85%-90%, and the gross margin of implants is between 93%-96%.
Unlike the highly competitive hyaluronic acid market, recombinant collagen, as a new material, not only has a significantly higher gross margin than hyaluronic acid but also has a large room for product application growth.
Data from Frost & Sullivan shows that the market size of recombinant collagen products reached 10.8 billion yuan in 2021, and it is expected to grow to 108.3 billion yuan by 2027, with a compound annual growth rate of 42.4%, accounting for 62.3% of China's collagen market. Among them, the market size of functional skincare based on recombinant collagen is expected to increase from 7.2 billion yuan in 2022 to 64.5 billion yuan in 2027, with a compound annual growth rate of 55.0%.
Compared to the first-mover advantage of hyaluronic acid, the "Medical Beauty Triumvirate" has chosen to quickly enter the new market through acquisitions and agency.
Taking Huaxi Bio as an example, in 2022, it acquired 51% of the shares of Yi'erkan Bio, which has been deeply involved in the collagen market for many years, for 233 million yuan, entering the recombinant collagen track, and steadily advancing the self-research and application of recombinant human collagen raw materials in skincare products with its advantages and resources in the field of biotechnology.A responsible person from Huaxi Biotech introduced, "At present, Huaxi Biotech has completed the layout of recombinant collagen in 'raw material end + terminal'. On the raw material end, the company launched four new products of recombinant type III collagen raw materials in 2023, upgrading the matrix of recombinant collagen raw materials from the supply side; on the terminal, recombinant collagen products have covered two major fields of medical devices and cosmetics." In addition to increasing the layout of collagen, Aimei Ke and Haohai Biotech are also actively expanding more diversified product lines.
Aimei Ke invested 856 million yuan to acquire 25.42% of the shares of South Korean botulinum toxin company Huons and signed a distribution agreement with it to introduce botulinum toxin products, which have been accepted for listing. Haohai Biotech has also successfully expanded its medical beauty product line to radio frequency and laser medical equipment, home instruments, and botulinum toxin through investments in Ouhua Meike and American Eirion.
At present, although the "three swordsmen of medical beauty" have achieved certain technical breakthroughs in new fields, a large amount of time and resources are still needed to form new growth points.
With the rapid penetration of components such as recombinant collagen and botulinum toxin, coupled with changes in the competitive landscape of hyaluronic acid, the medical beauty market is bound to usher in a new round of reshuffling.
The future market competition will not only be a simple product iteration, but also a comprehensive competition of scientific and technological innovation, user experience, and market strategy. Only those companies that can continuously adapt to market changes and respond quickly to consumer needs can stand invincible in this industry full of challenges and opportunities.