In China, a spring of beauty economy is coming. On the capital side, several hyaluronic acid concept stocks hit new highs; In the consumer market, “retaliatory” consumption has boosted the business of cosmetic surgery hospitals, with some Chinese medical and beauty agencies reporting a nearly 50% year-on-year increase in the number of clients during the Spring Festival.
However, the reporter further learned in the visit, compared with the popular hyaluronic acid, the market share of medical aesthetic equipment is more than 10 times the latter, and there is still a large market gap.
“Most of the large medical and aesthetic equipment came from abroad.” Zhou Zhou, the honorary president of the 2018 International Beauty Festival at the 50th China (Guangzhou) International Beauty Expo, said in an interview. Wei Hongmei, an analyst with Dongguan Securities, further pointed out that importers of relevant equipment like ALMA, Lumenis, Cynosure, Fotona and Syneron accounted for more than 80% of the market share in China’s regular medical and aesthetic institutions.
Local Chinese enterprises have entered the market successively. In addition to Fosun Pharma (600196.SH) and Suning Global (000718.SZ), East China Pharma (000963.SZ) announced on the evening of the 17th that it plans to acquire 100% shares of High Tech, a Spanish energy source medical beauty device company.
Chinese medical beauty agencies: busy, but not profitable
“Our dermatology department is so busy that we often work overtime.” “Dermatologist Hu Jiaxiu posted on her social media platform.
It is reported that the Spring Festival has always been a peak season for the medical beauty industry due to the psychological needs of consumers who “take on a new look” and the holiday provides sufficient time for postoperative recovery. This year, combined with the restricted demands due to the epidemic, the front-line consumption is even higher than in previous years. “Water light, wrinkle removal and hot maggie” has been joked by netizens as the new “New Year Trilogy”.
But from the commercial point of view, this is only a kind of superficial bustle, the actual profit of medical aesthetic organizations in China is not high.
“The medical beauty industry is an industry with very high marketing costs,” Zhou said the industry’s biggest problem is the high cost of customer acquisition. According to her observation, since 2018, the customer acquisition cost of Chinese medical and aesthetic institutions has doubled at least. “In order to acquire a new customer, marketing and promotion costs range from thousands to ten thousand yuan, and the re-purchase rate is generally low.”
Therefore, it is a rational choice to develop from the downstream of the medical aesthetic industry chain with a high turnover rate and homogenized competition to the upstream with higher gross profit and wider moat.
Light medical beauty becomes a trend in China
From the perspective of the whole medical aesthetic industry chain, medical beauty types can be subdivided into three categories: injection (hyaluronic acid, botulinum toxin, etc.), photoelectric medical beauty (also known as energy source medical beauty, mainly relying on medical aesthetic equipment) and surgery. The market ratio is about 3:3 to 4:4, according to industry research by Maepak Health.
According to Zhou, the proportion of surgical beauty is declining: “Surgical beauty, represented by South Korea, is mainly cosmetic surgery. And the expectation of beauty consumers is to achieve better results using gentler, less risky and faster recovery technologies. It is less invasive, faster recovery and less expensive than surgery.”
She provided a set of statistics to back up the argument. According to the American Society for Aesthetic Plastic Surgery (ASAPS), nonsurgical procedures have increased 39% in five years, while invasive procedures have increased only 17%; The annual development survey report of China’s medical cosmetology industry released by the China Association of Plastic Surgery shows that the amount of non-surgical services accounts for 70% and is on the rise.
There is a scarcity of investable medical aesthetic equipment
Therefore, in upstream of the medical beauty industry chain, there is investment potential for products such as hyaluronic acid suitable for injection and medical equipment suitable for photoelectric medical beauty.
In terms of injection, hyaluronic acid concept stocks have reached new highs many times in 2020, among which Aimeke broke the 1000 yuan mark at the end of 2020, known as “women’s Moutai”. According to iResearch, the market size of medical and cosmetic hyaluronic acid terminal products in China in 2019 was 4.251 billion yuan, which is expected to reach 6.950 billion yuan in 2023.
In the field of medical aesthetic devices, China’s domestic investment targets are still scarce.
On Zhihu, a netizen claiming to be an upstream supplier of the medical aesthetic industry listed several categories of medical aesthetic equipment: pulse light for skin tenderness and hair removal, laser for removing black and wrinkle, radiofrequency for skin tightening and anti-wrinkle, ultrasonic knife for contour enhancement, etc.
Related Chinese companies include Huadong Pharmaceutical, Fosun Pharmaceutical, Miracle Laser, Shenzhen Peninsula Medical Co., Ltd., Shenzhen GSD Technology Co., Ltd., Wuhan Zhongke Ricoptoelectric Technology Co., Ltd., etc. With the exception of Huadong Pharma and Fosun Pharma, most of the enterprises are still in the early stage of independent research and development.
According to the industry report of Leadleo Research Institute, the Chinese medical beauty equipment industry started late and the technical foundation of enterprises is relatively weak. Chinese medical aesthetic equipment mainly focuses on the manufacturing of medium and low-end products such as small instruments and life beauty equipment.
“Large-scale medical beauty devices require three years for clinical research alone, which is different from ordinary medical beauty products,” Zhou stressed. Leadleo Research Institute believes that core R&D personnel in this industry need to have comprehensive knowledge of medicine, electronics, automation control, laser medicine, biology and other aspects, and there is an urgent shortage of R&D personnel in China.
In addition, Mybio expects that the overall size of China’s medical aesthetic device market will grow from 53.07 billion yuan in 2019 to 99.45 billion yuan in 2023. It can be seen that the market space of medical aesthetic equipment in China is more than ten times that of hyaluronic acid.
Bringing in foreign technology
In this context, foreign cooperation and technology introduction has become a priority for Chinese enterprises that are subject to their own strength.
In fact, in the global scope, there are not many enterprises that master high-end photoelectric medical aesthetic technology. The basic principle of photoelectric medical beauty lies in the fact that through the skin tissues of different wavelengths of light the principle of pyrolysis, selective absorption and light by the light of specific wavelength range, applied to different target groups, used to treat different light damage, light aging skin lesions, and make the skin tissue collagen fiber and elastic fiber rearrange, thus to achieve younger skin.
For example, the radio frequency technology, Zhou Zhou introduced, began to be used in the field of home beauty 10 years ago. It generates heat through the regulation of electromagnetic waves, which acts on the dermis and subcutaneous layers of the skin to activate the fibrous tissue and collagen of the skin. The tissue is reconstructed to achieve the functions of wrinkle removal, apple muscle lifting, and skin relaxation. “Thermage, which is currently on the market, is a high-temperature focusing radiofrequency process.” Zhou Zhou said.
In years of explorations, Zhou Zhou found that Israel is an absolute technology exporter in this field, “occupying nearly 70% of the global market share of medical and aesthetic equipment”. Further information reveals that Israel’s medical and aesthetic optoelectronics technology is based on military laser technology. Among the above-mentioned optoelectronic equipment companies that account for 80% of the Chinese market, Fairton and Xenolon are all Israeli companies, while the American company Lumenis has its factory and research and development center located in Israel.
Zhou believes that Israeli start-ups have strong research capabilities, a small local market and a strong demand for external expansion, as well as a streamlined team structure, which enables Israeli companies to be more flexible in the process of foreign cooperation.
She also set up Israel AE Biotechnology Co., Ltd. to try to introduce Israeli technology and products to the Chinese market. The first product to be introduced is a small device for home use, the AE Cell Activator, which uses LED light of a specific wavelength to stimulate the skin to produce collagen and regulate hormone levels, thereby reducing fine lines, wrinkles, and melanin and chloasma and other medical beauty effects.
“We will strive to establish a new laboratory and production base in Israel in 2021, promote the transformation of more scientific research achievements, and achieve more expansion in the Chinese market,” Zhou said.
China’s leading companies are also entering the game by bringing in outside technology.
On the evening of the 17th, East China Pharmaceutical (000963.SZ) announced that it plans to acquire 100% of the shares of High Tech, an energy source medical aesthetic device company based in Spain.
Earlier, in 2013, Fosun Pharma (600196.SH) acquired 95.2% of Alma, an Israeli medical and cosmetic device company, which now ranks first in the Chinese market. At the end of 2016, Suning Global (000718.SZ) signed a strategic cooperation agreement with Syneron, the Israeli medical aesthetic equipment giant, in order to achieve “industrial chain coordination and reduce equipment cost” of medical beauty equipment.
Source: Science Innovation Board Daily