Collagen is becoming a new generation of hyaluronic acid.

Despite being hot enough, there is an obvious shortage of effective supply in the market. Currently, only Wei Yimei, a subsidiary of Jinbo Biotech, has obtained the three types of medical device qualifications.

With the accelerated entry of domestic and foreign giants such as LVMH, L'Oréal, and Perea, the market is eager to see manufacturers progress in approval and technological breakthroughs, especially to solve the problems of poor support as animal-derived collagen and high mass production costs to fill the shortage in the supply market and work together to expand the cake.

The advantages of pioneering leaders in terms of technology and certification have begun to be transformed into performance growth.

On the evening of March 25, Giant Biotech released its 2023 annual performance report. During the reporting period, sales revenue reached RMB 3524.1 million, an increase of 49% over 2022, and annual profit of RMB 1448.2 million, an increase of 44.6% over 2022;

Last week, another leading company, Jinbo Biotech's annual report revealed a year-on-year increase of 99.97% and 174.6% in net profit to mother.

Ke Fu Mei contributes 80% of revenue

The increase in performance mainly comes from its brand Kefumei. According to financial reports, Kefumei achieved brand revenue of RMB 2788.3 million during the reporting period, an increase of 72.9% compared with the same period in 2022, accounting for close to 80% of revenue.

Among them, the proportion of recombed dressings dropped from 90% in '19 to about 30% in '23, the share of subserums increased from 0% to 30%, other skincare products accounted for 40%, and the online share also increased from 16% in '19 to 66.2% in '23.

In 2023, the company has basically completed the transformation from offline dressings to online core skincare products.

It is worth mentioning that even though the company's cosmetics business has been growing at an accelerated pace since '22. 618 and Double Eleven both entered a high base stage, the two major promotions have doubled beyond expectations. This is mainly due to the increase brought about by the Douyin platform and the continued popularity of the star product Ke Mei Collagen Stick. According to financial reports, during the 2023-618 period, the GMV of collagen sticks increased by more than 700%; during the Double Eleven period, the GMV of collagen sticks increased by more than 200% year-on-year.

This trend continues. According to Magic Mirror data, in February 2024, the beauty and skincare industry achieved sales of 8.70 billion yuan on Tmall Taobao, a year-on-year decrease of 37.6%; on Douyin, sales reached 9.63 billion yuan, an increase of 40.3% over the previous year. In January-February, the online sales volume of the Juzi Bio Beauty and Skincare category increased 127% year-on-year.

In this month's 38th festival promotion, although the level of Kefumei discounts has weakened, its sales have doubled. In terms of categories, Kefumei collagen sticks and dressings are still the main products.

Compared to the 1 billion in 3 years that is the industry's benchmark, Pelaea's single product, Double Antibody Serum, Kefumei Collagen Stick, which broke 800 million in 2 years, has become a super single product. With the launch of the Order series and the improvement of the product matrix, some analysts predict that its sales are expected to reach 2 billion yuan.

However, if you look at it for a long time, in the field of beauty, Giants Biotech needs to come out with more big products.

Compared to Kofumei's explosive growth, the performance of another sub-brand, Klein, was slightly lackluster. During the reporting period, Klein achieved brand revenue of RMB 616.6 million, the same as the same period in 2022, accounting for 17.5% of total revenue, and only 22% of the volume that could be recovered.

Although they each focus on soothing, repair and anti-aging benefits, the two major brands rely on recombinant collagen, the core component of Giant Zi Bio. In order to create brand differences in the minds of consumers, it is necessary to introduce more targeted and deeply popular products. For example, Kefumei focuses on subtractive essences, while Clekin can be extended to bottled essences, face creams, and eye creams with stronger anti-aging effects. However, at present, Kleijin has not developed major anti-aging products.

Giant Biotech highlighted the new film eye cream released at the end of last year in its financial report. According to statistics, as of March 8, 2024, the Tmall flagship store sold more than 3,000 pieces of film eye cream. Since the market is still being cultivated, the sales scale is not large; at the same time, the film cream was also updated in March, so we need to observe the release of the two at 618.

What is certain is that after serums and masks, the company is seeking to create new growth points in categories such as eye cream and face cream that have potential but have yet to emerge as major pillar products. The “film” series will be a driving force for the company to open up the anti-aging circuit by using Kleijin. This is also a test of medium- to long-term growth.

The second recombinant collagen class three devices will soon be approved

Another test of medium- to long-term growth is medical and aesthetic injections.

In 2023, recombinant collagen showed high growth in both cosmetics and medical and aesthetic injections, and was offered as the next hyaluronic acid. Jinbo Biotech's Weiyimei achieved 500 million annual shipments at the beginning of the release.

A person from a medical and aesthetic agency pointed out that collagen injections are already in the first tier in the medical and aesthetic field, with an average growth rate of 40-50% in every hospital; regenerative injections followed closely and maintained a year-on-year growth rate of about 30%; followed by differentiated high-end hyaluronic acid, such as Haohai Biotech's Haimei, and the low-end market has shown signs of stagnating growth.

Currently, Giant Biotech has a total of 4 products in stock in the field of recombinant collagen injections: recombinant collagen liquid preparation (water light), recombinant collagen solid preparation (improves crow's feet), recombinant collagen gel (for moderate to severe neck lines), and cross-linked recombinant collagen gel (for moderate to severe nasolabial folds). The first two are expected to be approved in the second quarter of this year; the latter two are estimated to be approved in the first half of 2025.

Although recombinant collagen injection products will not contribute significantly in 2024, as long as they progress smoothly, as the second company to have recombinant collagen type 3 devices, products will be approved one after another, and the amount of new medical and aesthetic contributions to the company is highly certain.

Currently, the main competitors of Juzi Biotech's recombinant collagen injections on the market are “Platinum Ken” (Kinpo Biotech), an injectable recombinant type III humanized collagen solution launched by Xiulike, and Wei Yimei by Kinpo Biotech, but what they all have in common is that they are less supportive. Obviously, subsequent support and duration will be key indicators for recombinant collagen medical and aesthetic fillers, and leading companies' breakthroughs in research related to the tri-helix structure will be the focus of market attention.

On March 13, 2024, Giazi Biotech said it had achieved a technological breakthrough in CHO cells to efficiently express recombinant human collagen. This is an important step forward in research on recombinant human collagen with a natural three-helix (high-temperature tight three-helix) structure.

The study showed that under high temperature conditions, the three-helix structure of collagen constructed by CHO cells remains stable, which means that after entering the human body, it may last longer in a 37-degree environment and is more adaptable to changes in temperature.

However, due to the high cost of this technology, mass production is still difficult. If expression efficiency can be further improved and production costs are further reduced in the future, then this natural triple helix recombinant human collagen will have broader clinical application prospects.

With the approval of Juzi Biotech's three types of organic products, the market is also worried about increased competition in the recombinant collagen injection market. However, most experts believe that the industry is still in a period of rapid growth where supply stimulates demand, and the market capacity is large. According to some brokerage agency forecasts, the recombinant collagen market is expected to exceed 20 billion dollars by 2030, and leading R&D leaders will still enjoy a period of market dividends under long-term stricter compliance.