Yingmei is another rookie after the three trumps.

The popularity of medical beauty is on the rise, and Maori's listing in October last year directly ignited the entire medical beauty track. Since the beginning of this year, the established pharmaceutical companies Kangzhe Pharmaceutical, Sihuan Pharmaceutical, East China Pharmaceutical, Longzi shares and so on have been constantly spreading new actions in the layout of medicine and beauty. Of course, in this wave of pullback, Meimei also has a large range of pullback, especially Aimek (the maximum callback range is 51%).

From the production of a hyaluronic acid to the terminal sale, the price increase rate is as high as 17-50 times, it can be seen that the whole medical and beauty industry has a strong profit space in the upper, middle and lower reaches, and the comprehensive gross margin of Emick's terminal products is as high as 92%, comparable to Maotai.

From the perspective of the business model of medical beauty, across the two major areas of consumption and medicine, although it is optional consumption, the three attributes of women's rigid demand for beauty + low permeability of the industry and high premium of brand products are destined to make this track attractive! It can be said that the medical and beauty industry is another rookie after the three trump cards of "men's wine, old people's medicine, and children's games".

Picture the price increase of a hyaluronic acid from production to sale

02. The domestic medical and beauty market is in the stage of rapid expansion.

From the perspective of the scale of the medical beauty market, the growth rate of China's medical beauty market was much faster than the global growth rate in the past. The Chinese medical beauty market was only 29.8 billion yuan in 2012 and grew to 176.9 billion yuan in 2019 in seven years, with a compound annual growth rate of 29%, far exceeding the single-digit growth rate of the global medical beauty market (2015-2019 CAGR=8.9%). And, according to iResearch, China's medical beauty growth rate is still expected to achieve an annual growth rate of more than 20% in the next few years, and the market size is expected to exceed 300 billion yuan by 2023!

From a split point of view, the rapid development of China's medical and beauty market in the past mainly benefited from two aspects: per capita medical and beauty expenditure + penetration rate.

In terms of per capita medical and beauty expenditure, from 2015 to 2019, the per capita expenditure on medical and beauty services in China increased from 46 yuan to 103 yuan (CAGR reached 21.9%). The demand and purchasing power of medical and beauty services are increasing continuously, and is expected to double to 223 yuan by 2024.

In terms of penetration, compared with other developed countries in 2018, the penetration rate of medical beauty projects in China is still very low. In 2018, the penetration rate of medical beauty programs is only 14.5, while that of the United States is 52.3 and that of South Korea is 89.3. The overall penetration rate is about 4-6 times higher. In terms of penetration growth, although there are no exact data on the market at present, judging from the total market size CAGR29% and medical and beauty per capita expenditure CAGR22%, the annual penetration growth rate in recent years is about 7%.

From the overall consumption structure, light medical beauty projects have become more popular, non-surgical medical beauty projects are mainly injection filling, non-invasive rejuvenation, laser cosmetology and other projects, because there is no need for surgery, the risk is low and the effect is reversible, with the advantage of high frequency and low price. the market share has continued to increase in recent years, rising to 42% in 2019, with a compound growth rate of 24.6% in 2015-2019, far exceeding the 21.1% of surgery.

Map the scale and growth rate of China's subdivided medical and beauty service market (billion yuan)

Source: Frost Sullivan, Ruili Medical prospectus

03. Focus on these three medical and beauty market segments

The segment of the medical beauty market starts from the upstream, which is mainly composed of raw materials and equipment, with high-tech attributes of multi-disciplinary, knowledge-and capital-intensive, so it has the characteristics of high barriers and high gross profits, and the industry is also relatively concentrated. The number of production enterprises is relatively small. At present, the upstream industry is mainly based on all kinds of collagen, hyaluronic acid, Botox, laser therapy apparatus, radio frequency therapy apparatus, or body filling prosthesis materials and so on.

The two most important varieties in the upstream industry are hyaluronic acid and Botox. According to So-young International Inc's white paper, the number of global Botox cases accounted for 25.1% of the total cases in 2019, while that of hyaluronic acid was 17.3%. The combination of the two is as high as 42.4%. In 2019, the online purchase of hyaluronic acid in China accounted for 38.0% of the total consumption, while Botox accounted for 18.6%. The total of the two was more than 50%, which was higher than the global average.

The hottest hyaluronic acid, the scientific name hyaluronic acid, is abundant in human connective tissue and dermis. It has the function of moisturizing, repairing and nourishing the skin, making the skin moist, smooth, soft and elastic. The injection can be divided into fillers and skin protective agents. The cross-linked hyaluronic acid of filling materials is recognized as III medical devices by the country. The threshold is very high, the price varies from hundreds to tens of thousands, and the gross profit of manufacturers is naturally very high.

Judging from the market scale of hyaluronic acid in China, it is nearly 1.2 billion in 2014 and is expected to reach 4.7 billion yuan in 2020. The market size has directly quadrupled (CAGR reached 25.3% from 2014 to 2020). At present, there are many kinds of hyaluronic acid products on the market, with 13 brands certified by national CFDA in 2017 and 24 brand products by the end of 2019. According to the injection needs of different parts of consumers, each brand has launched different product lines.

Picture the market scale of medical beauty hyaluronic acid products in China (100 million yuan)

At present, the market share of China's mainstream products is still occupied by the United States, Sweden and South Korea. In 2019, the first four foreign enterprises ate 68% of the market share, while domestic Emeike, Huaxi Bio, and Haohai Bio are on the rise. In particular, Aimeke's share has increased rapidly in recent years, reaching 10.1% in 2019, ranking first in China.

Picture the market competition pattern of cosmetic hyaluronic acid products in China (market share)

Another large product, Botox, is a bacterial exotoxin produced by Botox in the process of growth and reproduction. Among them, botulinum toxin A blocks neuromuscular conduction through the cleavage of proteins necessary for the release of acetylcholine, and causes relaxation paralysis (without blocking the spread of nerve excitement), so as to achieve the effect of treating wrinkles or losing face and slimming. At present, it is widely used in the medical and cosmetic industry and is deeply loved by consumers. Because of the risk of its injection, the State Food and Drug Administration listed it as a toxic drug in 2008. Botulinum toxin is strictly controlled from circulation to use, and the license examination and approval cycle is at least about 5 years.

The market scale of Botox is much smaller than that of hyaluronic acid. Domestic sales are expected to be only 1.7 billion in 2020 (an average compound growth rate of 27.3% from 2011 to 2015). At present, the penetration rate of Botox is only 2%, the market acceptance is gradually increasing, and the growth rate is not low in recent years. the future growth ceiling is relatively high, and the China Research Institute expects the domestic botulinum toxin market to double to 3.26 billion by 2025.

The competition pattern of Botox is a little better than hyaluronic acid. At present, there are only two products in the market: Botox (American Elgin) and Hengli (domestic). According to the sample hospital data, the market share of Botox products rose to 53.5% in 2018, leading Hengli.

In the next three years, four to five botulinum toxin products will be listed in China. In June 2020, Dysportji, the third botulinum toxin product in the UK, was approved by China's State Drug Administration. In October of the same year, South Korea's Letybo Letibao (the exclusive agent of Sihuan Pharmaceutical) was also approved to be listed on the market. South Korea Hutox Haotou Si (Emmett agent) is still in the approval process, is expected to be approved for listing next year and the year after next.

In addition, medical and beauty terminal institutions, at present, domestic medical and beauty institutions are mainly plastic surgery departments of public hospitals, large chain plastic surgery hospitals, small and medium-sized beauty clinics and small beauty clinics. In 2012, there were about 2779 medical and beauty institutions (hospitals + outpatient departments + clinics) nationwide, and the number increased to 11974 in 2018, with a compound growth rate of 27.6%. Among them, there are a total of 451 orthopedic hospitals and cosmetic hospitals, and the number of outpatient departments and clinics accounts for most of the market share. These are mainly private institutions.

Figure the number of medical and cosmetic institutions in China

Large medical institutions such as Meilai, Art Star, Emile, Huahan plastic surgery, SUNING Global, etc., usually large medical institutions have more than 10 full-time attending doctors, covering an area of more than 3000 square meters; small and medium-sized medical institutions, such as Beijing Changhong, Sichuan Huamei Zixin, Hangzhou time, etc., usually about 50-3000 square meters, with about 3 full-time doctors At present, small and micro institutions, with one attending doctor and three assistants, are the most common places where "black clinics" appear.

As medical beauty projects have the characteristics of personalized consumption and regional differentiation, it is difficult for institutions to replicate their operational experience across provinces and cities. at present, the competition pattern of the domestic medical beauty market is highly dispersed, with small and medium-sized medical and beauty institutions accounting for more than 70% in 2019. The market share of large-scale medical and beauty institutions is about 10%, and we have not seen which leader has formed a leading advantage. Looking to the future, with the maturity of the regulatory system of medical institutions and the upgrading of consumer demand, the industry concentration is expected to be improved to a certain extent.

Picture the competition pattern of medical and cosmetic institutions in China in 2019

04. The core targets of the medical and beauty industry are all here

(1) Emmett: the leader of hyaluronic acid, the gross profit is comparable to Maotai.

The company is the leader of hyaluronic acid, with a comprehensive gross profit margin of 92% and a net profit rate of 61% in 2020. At present, it has 6 products, of which 5 are domestic debut, and the other is an upgraded product. The company has developed rapidly in recent years, and its hyaluronic acid products have surpassed other domestic competitors, ranking first in the market. Two of its products, Avery and Hi, accounted for 82.77% of the company's total revenue in 2019. The hi body, which went on sale at the end of 2016, is the first and only product aimed at neckline repair in China, and there is expected to be no competition in the next few years.

(2) Huaxi biology: the raw material leader of hyaluronic acid, the integrated development of upstream and downstream

Huaxi Biological is the first to start, accounting for 36% of the global market share in 2018, and is the world's largest producer of hyaluronic acid raw materials. The company started with hyaluronic acid raw materials, and then expanded to the downstream field of medical beauty and cosmetics. At present, it has a number of hyaluronic acid brands, such as Quadi, run Baiyan, secondary throwing original liquid, Deman and other hyaluronic acid brands. In 2018, the cultural and creative lipstick and secondary throwing original liquid products in cooperation with the Imperial Palace became popular; in 2019, the skin care business accounted for 33.6% of the total revenue.

(3) East China Medicine: the medical pipeline is rich, and more than five products are expected to be put on the market in the next 5 years.

The company has three major medical and beauty business platforms, and the core business is hyaluronic acid products. The company has cut into the medical and American racetrack with acting Ewan hyaluronic acid for 13 years, acquired Sinclair in 18 years to lay the foundation, and bought shares in American R2 company + Swiss Kylane company + agent Jetema botulinum toxin in 19-20 years, further enriching the product portfolio, thus building a differentiated and competitive medical and beauty pipeline. In 21-25 years, several new medical products of the company are expected to appear on the market one after another, and there is no lack of Ellanse, MaiLi and other important products. In 2019, the revenue of East China Pharmaceutical and Beauty products was 1.2 billion yuan, and hyaluronic acid business accounted for 3% of the total revenue.

(4) Hao Haisheng: three core products, accounting for 23% of the revenue of medical beauty.

Hao Haisheng focuses more on the field of medicine, mainly for public hospitals. The company has only three products in the field of medicine and beauty, namely, entry-level Haiwei, middle Jiaolan and high-end enchantment. The company's products mainly focus on hyaluronic acid for ophthalmology, accounting for 45.65% of the total revenue. The revenue of orthopaedics and medical beauty is almost the same, accounting for 19.21% and 22.98%, respectively.

(5) four-ring medicine: pharmacy + medical beauty two-wheel drive

The company has formed two major plates: medicine and medical beauty, and the medical beauty plate is in the incubation stage. Since 14 years, the company has cooperated with Hugel of Korea to jointly develop the Chinese market of Botox and hyaluronic acid products. Among them, Botox Letibao was officially approved to be listed in China in October 20, becoming the fourth botulinum toxin product in China and the first approved botulinum toxin product in South Korea. In early February this year, it officially began its marketing activities. It is expected that in the next three years, Letibao is expected to account for about 30% of the market share of botulinum toxin products. In addition, the company expects to launch hyaluronic acid and child facial needle products within two years.

(6) Longzi shares: horse racing enclosure in the field of medical and beauty terminals.

The company is mainly engaged in high-end women's wear, currently running horse enclosure in the field of medical and beauty terminals (H1 revenue accounts for 29% in 20 years), fully promoting the expansion of M & A business and speeding up the chain layout of medical and beauty institutions. The company entered the field of medical beauty in 2016. As of 2020Q3, the company operates a total of 18 medical beauty terminal institutions (Milan Baiyu / Crystal skin Medical Beauty / Gao Shengsheng is the home in 4-12-2 respectively), the initial scale. The company continues to increase the medical and beauty track, and successively set up Bochen No. 5 / 8 (with its own capital of 2 / 125 million yuan and a fund size of 4.01 / 251 million yuan) from December 20 to February 21 to invest in the shares of unlisted companies in the medical and beauty field and related industries. At the same time, the company accelerates the expansion of Jingfu store chain and expects to add 10-20 stores in 21 years.