The sales expenses of Jinbo Biotechnology and Juzi Biotechnology have increased significantly

Zhongxin Jingwei, April 19 (Lin Wansi) Recently, Giant Biotech and Jinbo Biotech, which are the "first share of recombinant collagen" in Hong Kong and the Beijing Stock Exchange, have successively handed over their 2023 annual report cards.

From the perspective of product application terminals, Juzi Biotech, which holds "Fumei", is striving for clinical and approval of filler products, and Jinbo Biotech, which holds "Wei Yimei", is expanding the application scenario of recombinant collagen from the face to the hair. Is there a future of collagen that "does everything"?

Fumei contributed nearly eighty percent of Giant Bio's revenue

According to the 2023 annual results announcement, Juzi Biotech achieved revenue of 3.524 billion yuan, a year-on-year increase of 49.0%, and net profit attributable to the parent company was 1.452 billion yuan, a year-on-year increase of 44.9%.

In 2023, Jinbo Biotech's revenue will be 780 million yuan, and the net profit attributable to the parent company will be 300 million yuan. Although Jinbo Biotech's revenue and net profit are not as good as those of Juzi Biotech, the growth rate exceeds the latter, with a year-on-year increase of 99.96% and 174.60% respectively.

Both are the "No. 1 recombinant collagen stocks", but their revenue focuses are different.

According to the official website, Giant Biotech was established in 2000, focusing on three major industrial directions: functional skin care products, medical devices, functional foods and formula foods for special medical purposes.

Juzi Biotech has been famous in the market for medical dressing products such as "collagen mask" and "machine brand mask", but its performance pillar is the functional skin care product sector, and the revenue proportion of medical dressing products is declining.

In 2023, the revenue of Juzi Bio's functional skin care products will be 2.647 billion yuan, a year-on-year increase of 69.6%, and the proportion of its main business will further increase to 75.1%, while the revenue of medical dressings will be 861 million yuan, and the proportion of revenue will further decline to 24.4%.

In recent years, in the field of professional skin care products, the gap between the revenue proportion of medical dressings and functional skin care products of Juzi Biotech has become wider and wider. From 2021 to 2022, the revenue proportion of functional skin care products increased from 55.5% to 66.0%, and the revenue proportion of medical dressings decreased from 41.3% to 32.2%.

Among the brands of Juzi Biotech, Kelijin and Kefumei are the two main forces, and their products include functional skin care products and medical dressings. In 2023, the sales revenue of Fumei will be 2.788 billion yuan, an increase of 72.9% year-on-year, accounting for 79.1% of the total revenue in 2023.

In 2023, the sales revenue of Kelijin will be 617 million yuan, basically the same as the same period last year, accounting for 17.5% of the total revenue in 2023.

The main business of Jinbo Biotech is the R&D, production and sales of various terminal medical device products and functional skin care products with type A recombinant humanized collagen as the core raw material.

Unlike Juzi Biotech, which focuses on the application fields of functional skin care products and medical dressings, Jinbo Biotech's main revenue is in implant products.

In the revenue structure of Jinbo Biotech, the revenue of medical devices was 680 million yuan, a year-on-year increase of 122.66%, and the gross profit margin increased by 4.89 percentage points to 93.18%, which accounted for 87.18% of the total revenue. Functional skin care products and raw materials and others achieved revenue of 75.9344 million yuan and 24.1813 million yuan respectively, a year-on-year increase of 12.00% and 42.89%.

Jinbo Biotech explained that the revenue of medical device products increased by 122.66% year-on-year, mainly due to the significant increase in revenue of single-material medical devices compared with the same period last year, among which the company's sales revenue of recombinant type III humanized collagen freeze-dried fiber and recombinant type III humanized collagen gel grew rapidly.

At present, Jinbo Bio's recombinant type III humanized collagen freeze-dried fiber products on sale have multiple specifications of 2mg/bottle/box, 4mg/bottle/box, 6mg/bottle/box, and 10mg/bottle/box. Among them, 4mg/bottle/box of recombinant type III humanized collagen lyophilized fiber belongs to the implant products of the Weiyimei brand.

At the end of March 2024, Jinbo Biotech said on the investor communication platform that in 2023, the sales volume of Weiyimei implant products will exceed 570,000. At the end of November 2023, the investor research minutes disclosed by Jinbo Biotech showed that the ex-factory price of the company's 4mg recombinant type III humanized collagen freeze-dried fiber has not changed significantly after it was launched. According to the disclosure in the prospectus, based on the ex-factory price of 711.51 yuan/bottle in 2022, the revenue of Weiyimei implant products in 2023 will exceed 405 million yuan, accounting for more than 52% of the total revenue.

Selling expenses increased

Regarding the substantial increase in operating income, Jinbo Biotech said in its 2023 annual report that it is mainly due to the company's substantial increase in sales scale by increasing brand promotion, product market education and promotion, deepening existing customers and continuously expanding new customers, while the company actively develops new products and product upgrades, optimizes and improves the product matrix, and the sales scale has increased significantly.

According to the annual report, the R&D expenses of Jinbo Biotech were 84.977 million yuan, a year-on-year increase of 87.12%, and the R&D expense rate was decreasing year by year.

From 2020 to 2023, the R&D expense ratios of Jinbo Biotech will be 14.74%, 12.45%, 11.64%, and 10.89% respectively, showing a downward trend.

In terms of sales expenses, from 2020 to 2023, the sales expense ratios of Jinbo Biotech will be 23.27%, 23.98%, 26.90%, and 21.14% respectively. In 2023, Jinbo Biotech's sales expenses increased by 57.17% year-on-year.

Jinbo Biotech said that in 2023, the year-on-year increase in the company's sales expenses is mainly due to the continuous growth of the company's sales scale, on the one hand, the company expands the sales team, the salary and expenses of sales personnel increase, and on the other hand, the company increases brand promotion efforts and increases publicity and promotion expenses.

Similar to the driving factors of Jinbo Biotech's revenue growth, Juzi Biotech said that the main reason for the growth of operating income in 2023 is that the company continues to expand product types, deepen online channels, create star products and strengthen marketing, which further improves the influence of products and brands, and achieves rapid growth in sales revenue.

Online channels have become the main battlefield of giant creatures.

According to the 2023 annual report, the online direct sales revenue of Giant Biotech through DTC (direct-to-consumer) stores was 2.155 billion yuan, an increase of 77.5% year-on-year, accounting for 61.2% of the total revenue in 2023, accounting for the largest proportion of all direct sales channels, and the online direct sales revenue for e-commerce platforms was 178 million yuan, an increase of 42.7% year-on-year, accounting for 5.0% of the total revenue in 2023.

At the same time, the 2023 annual report shows that the online omni-channel GMV growth rate of Kefumei and Kelijin exceeded 165% and 70% respectively during 618, and exceeded 100% and 50% respectively during Double 11.

However, behind the growth of online revenue is the fact that Giant Biotech has invested a lot of marketing expenses.

According to the 2023 annual report of Giant Biotech, due to the increase in online marketing expenses due to the rapid expansion of online direct sales channels, sales and distribution expenses increased from 706 million yuan in 2022 to 1.165 billion yuan in 2023, a year-on-year increase of 64.8%.

Due to the increase in cost of sales and the expansion of product types, the gross profit margin of Giant Biotech decreased from 84.4% in 2022 to 83.6% in 2023.

"Anything goes" collagen?

Zhongxin Jingwei noticed that from the perspective of application terminals, the products of collagen players in the current market are more concentrated in the field of functional skin care products and medical dressings, and there are fewer entrants in the field of medical beauty injections.

The reality that cannot be ignored is that companies such as Giant Biotech and Chuangjian Medical are applying for three types of medical device filler products.

In this regard, in its 2023 annual report, Juzi Biotech looks forward to 2024 and says that it will continue to increase R&D investment, promote more breakthroughs in basic technologies and new raw materials and products, enrich the category matrix, and do a good job in the clinical and approval of skin rejuvenation products for three types of medical devices, so as to lay a good foundation for the company's multi-level growth curve.

In the prospectus disclosed in 2022, the company said that the company is developing new and innovative filler products with recombinant collagen as the main bioactive ingredient. The skin rejuvenation segment is not only a segment with huge growth opportunities, but also has a high barrier to entry due to its classification as a Class III medical device in China.

Giant Biotech's skin rejuvenation pipeline includes recombinant collagen liquid formulations (for facial skin), recombinant collagen solid formulations (mainly for facial wrinkles such as forehead lines and crow's feet), recombinant collagen gels (mainly for moderate to severe neck lines), and cross-linked recombinant collagen gels (mainly for moderate to severe nasolabial folds).

Giant Biotech said in the prospectus that the first two products and the latter two products are expected to obtain Class III medical device registration certificates in the first quarter of 2024 and the first half of 2025. However, up to now, there is no Class III medical device product on the market under Giant Biotech.

In contrast, Jinbo Biotech has conquered a city in the third class of medical device products. However, under the hot market, Jinbo Biotech has not only extended an olive branch to the field of functional skin care products, but also increased the field of raw materials.

In 2023, Jinbo Biotech will enter L'Oréal's supply chain system for the first time and sell recombinant collagen raw materials to L'Oréal.

In terms of functional skin care products, Jinbo Biotech said that the operating income of functional skin care products increased by 12.00% in the current period compared with the same period last year, mainly due to the addition of single-ingredient functional skin care products "ProtYouth" in mid-June 2023, resulting in an increase of 66.54% in single-ingredient functional skin care products over the same period last year.

According to the 2023 annual report, the "ProtYouth" product uses type A recombinant humanized collagen as a single ingredient, and replenishes collagen through external application, which has the functions of moisturizing, repairing, soothing, and controlling oil.

At the same time, Jinbo Biotech has also expanded the application scenarios of recombinant collagen from face to hair. Zhongxin Jingwei found that on the flagship store of Jinbo Bio's official website, "ProtYouth" shampoo and conditioner have been put on the shelves, and the core ingredient is XVII type collagen. According to the product leaflet, the shampoo's benefits include nourishing, repairing, cleansing, moisturizing, soothing, and controlling oil.

At the end of March 2024, Jinbo Biotech said on the investor Q&A platform that the "ProtYouth" shampoo product is being promoted in an orderly manner according to the sales plan. In addition, in the recombinant collagen product introduction on the official website of Jinbo Biotech, Jinbo Biotech has also laid out the "purest source" sub-throwing essence for scalp only.

(For more reporting clues, please contact the author of this article, Lin Wansi: [email protected]) (Sino-Singapore Jingwei APP)

(The views in the article are for reference only and do not constitute investment advice, investment is risky, and you need to be cautious when entering the market.) )

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Editor in charge: Chang Tao and Li Zhongyuan