Hyaluronic acid producers benefit from beauty boom

Domestic players see their market share grow as price-sensitive Chinese consumers favor cheaper products for cosmetic surgery and treatment

In late 2018, the release of a lipstick collection in six colors by the Palace Museum in Beijing provoked enormous excitement among fashion lovers.

All the lipsticks were inspired by objects from the Palace Museum collection, and although each lipstick was priced at 199 yuan ($29), much higher than those of many domestic brands, more than 1,000 were sold within hours of their release.

Apart from the cultural cache of the world famous landmark and the allure of the colorful packaging, another key factor for the product's success was that the Palace Museum teamed up with local company Bloomage Biotechnology Co Ltd, which is based in Jinan, Shandong province, to design and produce the lipsticks using hyaluronic acid technology.

In China, with the fast development of the cosmetic surgery industry, demand for cosmetic procedures using hyaluronic acid, either surgical or nonsurgical, is booming.

In 2013, a total of 6.6 million cosmetic procedures - both surgical and nonsurgical - were performed in China, while the number increased to 16.3 million in 2017, growing 25.4 percent on average each year, according to a report by Frost & Sullivan China released in 2018.

The size of the cosmetic surgery market in China jumped to 99.3 billion yuan in 2017 from 41.9 billion yuan in 2013, the report said.

Among all the cosmetic procedures in 2017, about 30 percent were surgical, while almost 70 percent were nonsurgical, and around 70 percent involved were botulinum toxin and hyaluronic acid treatment, the report said.

Chinese people are expected to increase their spending on hyaluronic acid treatments, according to another report on the hyaluronic acid industry by Frost & Sullivan China, which was released in early 2019.

From 2013 to 2017, the amount of hyaluronic acid sold in China annually increased from 124.9 metric tons to 308.1 tons, with an average yearly growth of 25.3 percent, it said.

The report said the cosmetic surgery industry is becoming the most important consumption sector for hyaluronic acid, because hyaluronic acid used in cosmetic procedures, through injection or external use, needs to be repeated regularly to sustain the effects.

The report estimated that sales of hyaluronic acid in China will grow 14.1 percent on average each year from 2018 to 2022, to reach 613.2 tons.

The size of the hyaluronic acid market in China was 7.83 billion yuan in 2017, with average annual growth from 2013 reaching 36.6 percent, it said.

Since Restylane from Sweden's Q-Med received market launch approval from Chinese health authorities in 2008, competition in China's hyaluronic acid market has intensified with increasing numbers of new drug applications in recent years.

In 2012, Bloomage Biotech's Biohyalux was approved by Chinese authorities, becoming the first domestic hyaluronic acid injection product.

Chinese market players, including Bloomage Biotech, Shanghai-based Haohai Biological Technology, and Beijing-based IMEIK Technology Development Co Ltd, are strengthening their presence, driven by improved technologies, a positive brand image and increased market demand.

The Shanghai Stock Exchange has accepted listing applications from both Bloomage Biotech and Haohai Biological Technology for the science and technology innovation board, while IMEIK has recently refiled a listing application for the startup board.

According to Bloomage Biotech's prospectus, the company, which produces both hyaluronic acid raw materials and end products such as medical injection and skin care products, has reported fast growth in recent years.

Its revenue was 733 million yuan, 818 million yuan and 1.26 billion yuan in 2016, 2017 and 2018 respectively, while its net profit increased from 222 million yuan in 2017 to 424 million yuan last year.

Zhao Yan, president of Bloomage Biotech, said the company's key technologies in producing hyaluronic acid through microbial fermentation not only improve product quality, but also significantly increase productivity and reduce production costs.

The average yearly revenue growth of Haohai Biological Technology, which mainly focuses on medical products, was 34.6 percent from 2016 to 2018, its prospectus showed.

Its main business revenue was 860 million yuan, 1.35 billion yuan and 1.55 billion yuan in 2016, 2017 and 2018, respectively.

As for IMEIK, its revenue was 141 million yuan, 222 million yuan and 321 million yuan in 2016, 2017 and 2018 respectively, with its gross profit margin consistently exceeding 85 percent.

While the foreign brand Restylane takes up about 40 percent of China's hyaluronic acid fillers market, Bloomage Biotech's Biohyalux, accounts for 25 percent, according to the Frost& Sullivan China report.

Zhao said Chinese companies have paid growing attention to improving product quality in recent years, and customers now have good faith in Chinese hyaluronic acid brands.

"Through increased investment in research and development and talent, as well as well-regulated management and production activities, the quality of Chinese companies' hyaluronic acid products has been largely improved in recent years," she said.

Zheng Wen, executive president of a clinic under Reindeer Beauty, a Beijing-based startup chain of cosmetic surgery clinics focusing on medium to small cities, said the China market was dominated by foreign brands about 10 years ago, while now Chinese brands are also popular.

"Average Chinese people who are sensitive to prices often choose Chinese brands because they are cheaper compared with foreign ones," she said.

liuzhihua@chinadaily.com.cn

(China Daily Global 08/07/2019 page9)