“Investor Network” Cai Jun

The hyaluronic acid competition among the Three Musketeers of Medicine and Aesthetics is getting hotter and hotter.

Recently, Haohai Biotech (688366.SH, hereinafter referred to as the “Company”) and Aimeike released their 2023 Annual Report. During the reporting period, the company's operating income and net profit attributable to shareholders of listed companies were 2,654 million yuan and 416 million yuan respectively, up 24.59% and 130.58% year-on-year respectively.

In the same period, Aimeike's operating revenue and net profit attributable to shareholders of listed companies were 2.87 billion yuan and 1,858 billion yuan respectively, up 47.99% and 47.08% year-on-year respectively. It should be pointed out that the medical and aesthetic sector of American customers accounts for a larger share, so the net interest rate is higher.

In terms of Haohai Biotech, along with the high increase in hyaluronic acid sales, the medical and aesthetic category already accounts for more than ophthalmology. When Aimeike took the lead in the middle and high-end categories with Hi-Tech, the company marched into the high-end and faced competition from imported brands.

Compared to the medical and aesthetic category, which is on the cusp, the company's ophthalmology category has entered a complicated pattern. The industry is showing diversified competition, and emerging products and importers are stirring up this big cake.

The fierce competition of hyaluronic acid

Hyaluronic acid from Haohai Biotech has taken its place.

In 2023, the company's medical and aesthetic sector generated revenue of 1,057 billion yuan, an increase of 41% over the previous year. For the first time, the sector surpassed the ophthalmology category, accounting for about 40% of revenue. Among them, hyaluronic acid contributed 602 million yuan, an increase of 96% over the previous year.

According to data, the company's hyaluronic acid has three series, including Haiwei, Jiaolan, and Haimei. The corresponding prices are 500-1000 yuan/needle, 2000-4000 yuan/needle, and 11000-13,000 yuan/needle. In 2023, the Haimei series achieved sales of more than 230 million yuan, an increase of 129.32% over the previous year, which is particularly remarkable.

According to Haitong Securities, Haimei is the most expensive domestically produced facial hyaluronic acid. Aimeike and Huaxi Biotech both have similar products, but the price is less than 3,000 yuan/needle. The main competitor on the market is the imported brand Juvederm Fengyan, which is priced at 12,000 to 15,000 yuan/needle. In Xiaohongshu, there are quite a few notes comparing the efficacy and cost performance of domestic products and imported products. There are various opinions.

In response, Haohai Biotech replied to “Investor Network”: “Haimi” hyaluronic acid has received market recognition for its high-end hyaluronic acid positioning due to its unique product characteristics; at the same time, the company has stabilized its leading academic position in the industry through “Sea Charm” high-end products and enhanced customer adhesion to the Group.

For the other two hyaluronic acid series, the revenue of Haiwei and Jiaolan in 2023 also increased by 94.14% and 57.7%, respectively. Competitors at the same price include Red Sea, domestic and imported products, including Huaxi Biotech's Renbaiyan, Aimeike's Aimei and Hi-Tei, and South Korea's LG's Ewan.

Among them, Hiti, which loves the US, is firmly at the top of domestic production. The company disclosed that solution injection products with Hi-Body as the core achieved sales of 1.67 billion yuan in 2023, an increase of 29.22% over the previous year, far exceeding the company's 602 million yuan.

It is worth noting that the sales experience of hyaluronic acid products is through offline institutions, but the Internet has become the source of distribution. Consumers read recommended notes and short videos on online platforms, then go to medical and aesthetic institutions to place orders.

However, due to a large amount of misleading content, Douyin and Xiaohongshu restricted the streaming of medical and aesthetic product videos and notes this year. Take Xiaohongshu as an example. Some notes will have the word “sponsor” in the lower left corner when the information stream shows content such as Aimeike's Hi, the company's Hai Mei, etc.

Haohai Biotech said at the March performance briefing that although the strengthening of online medical and aesthetic supervision has reduced the activity of online medical and aesthetic promotion, on the one hand, it has also improved the compliance and seriousness of the medical and aesthetic industry; overall, the company is still quite optimistic about this, and the company itself uses offline academic discussions, doctor training, and offline promotion to carry out corresponding sales work.

In 2023, the conference fee of the company's sales expenses was 27.778 million yuan, an increase of 108.5% over the previous year, accounting for 10.8%.

Confusing ophthalmology circuit

Compared to the medical and aesthetic sector, the pattern of the ophthalmology circuit is more complicated. Emerging products are constantly impacting traditional products, and imported brands are also challenging domestic products in terms of cost performance.

In 2023, the company's ophthalmology revenue was 928 million yuan, an increase of 20.57% over the previous year, accounting for 35.08% of revenue. By product, product lines such as optometry and cataract were 400 million yuan and 497 million yuan respectively, up 5.82% and 35.07% year-on-year respectively.

Obviously, the slow growth rate of optometry products reflects the situation in the industry. This type of product, commonly known as OK lenses, is used for myopia prevention, prevention, and refraction correction. Due to the widespread needs of young people, it has spawned Opcon Vision, a market capitalization company with a market capitalization of 10 billion dollars. However, the OK mirror seems to have passed.

In the first three quarters of 2023, Opcom TV's revenue increased by only 4.46% year over year. The market believes that emerging defocus lenses, functional frame glasses, etc. are diverting potential users. These products have similar functions but a more flexible marketing model. At the same time, Atropine eye drops, which were successfully approved by Sinqi Eye Medicine, may replace OK lenses.

At the performance briefing, Haohai Biotech believes that the future development strategy of OK Mirror is on the one hand to continuously improve the level of material research and development, such as continuous improvement of oxygen permeability, so that the clinical performance of OK Mirror is better and better; on the other hand, it highlights the company's special design of OK Mirror.

The trend of OK lenses is slowing down, and it is still artificial lenses that support ophthalmology revenue. Since 2021, local companies have used allied procurement methods to bid for such products, and domestic manufacturers have exchanged price for volume to replace imports.

In 2023, Haohai Biotech's intraocular lens revenue was 380 million yuan, an increase of 37% over the previous year. The company replied to “Investor Network” that the revenue of this line has increased significantly, mainly due to product restructuring; volume procurement has accelerated the upward upgrading of the quality and level of the entire artificial lens product, and the company's system has also hedged the gross profit and downward unit price losses of a single product through product structure optimization. Overall, the revenue and gross profit of this type of product are still growing steadily.

It is worth noting that in November 2023, Alcon of the United States won the bid for high-end artificial lens collection, and the price of some varieties was lower than that of domestic production. In other words, importers have become “price butchers,” and the advantages of domestic brands in terms of good quality and low price may disappear.

Faced with the challenge, Haohai Biotech responded to “Investor Network”. There will be two continuous changes in the revenue structure of the artificial lens product line in the future.

First, the company's cost control will get better and better based on the continuous application of innovative processes and large-scale production. In June 2023, the products produced by the company's new hydrophobic molding process were approved and successfully won the bid in the national procurement. Compared with the classic turning and milling process, the cost of the hydrophobic molding process is more controllable, which is more conducive to large-scale production, and the company's cost pressure under collection will gradually decrease.

Second, along with the product layout and continuous research and development over the past few years, the development and registration of the company's high-end products is progressing in an orderly manner. It is very hopeful that astigmatism crystals and multifocal crystals will be approved as scheduled, further enhancing the competitiveness of the company's product line. (Produced by Thinking Finance) ■