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In the first two years, when hyaluronic acid was sought after as "medical beauty Moutai", Bloomage Biotech was synonymous with hyaluronic acid.
Hyaluronic acid (also known as hyaluronic acid) is a polysaccharide molecule widely found in the human body that helps maintain the elasticity and radiance of the skin, and can be slowed down by injection or topical application. In the field of medical cosmetology, hyaluronic acid products were regarded as "medical cosmetology Moutai" by many investors in the early years due to their high gross profit, wide recognition and strong demand.
Bloomage Biotech is a leading giant in the "Medical Beauty Moutai" industry. With the advantages of early entry and technical patents, it quickly became the largest hyaluronic acid raw material supplier in the world in terms of market share, and was listed on the A-share market in 2019. Since then, Bloomage Biotech's revenue has risen from 1.89 billion yuan to 6.36 billion yuan, and its market value has reached a peak of 150 billion yuan in 2021.
But now, the high growth rate of Bloomage Biotech has disappeared with the "outgas" of hyaluronic acid. The resignation of management, the double decline in revenue and net profit, and the ...... by the Shanghai Consumer Protection Committee Bloomage Biotech's 2023 is almost all negative news, and its market value has fallen from 150 billion at its peak to more than 30 billion yuan.
Is hyaluronic acid really bad for making money?
Comparing several major hyaluronic acid suppliers, the answer does not seem to be the case. In the past year, Aimeike and Haohaishengke, which are mainly engaged in hyaluronic acid medical aesthetic business, still maintained double-digit growth in performance; Freda, which used to be "homologous" with Bloomage Biotech, has also achieved double-digit growth in its raw materials and cosmetics sectors. Among the four listed companies that started with hyaluronic acid, Bloomage Biotech is the only one with a year-on-year decline in revenue and net profit.
According to the annual report, Bloomage Biotech's total revenue last year was 6.076 billion yuan, a year-on-year decrease of 4.45%; net profit was 593 million yuan, down 38.97% year-on-year.
Why is only Bloomage Biotech's growth engine stalling? What's wrong with its core business? After the relisting, founder Zhao Yan has always emphasized that Bloomage Biotech is a "synthetic biotechnology-driven company", not just a hyaluronic acid manufacturer. In these years of huge R&D investment, has it found a new "ingredient moat" other than hyaluronic acid?
In the track of skin beautifying ingredients, there are three main ways to apply hyaluronic acid. One is to play the core ingredient in skin care products; second, it is added to drinks and snacks as a food raw material; The third type is medical aesthetic projects, such as the well-known skin boosters.
In the field of medical aesthetics, hyaluronic acid is living a pretty good life. Although hyaluronic acid is not as highly discussed in various fields as before, for many medical beauty novices, skin boosters are still the first choice for solving skin problems. Low pain, good long-term performance, and low side effects make skin boosters the end of many sensitive skin care products. ”
But in the skincare and food industry, the star of hyaluronic acid is getting dimmer.
Since the rise of the ingredient party, various effective active substances in the field of skin care products have been praised as "star ingredients", especially after the concept of "morning C and evening A" became popular, "A alcohol", "niacinamide", "polypeptides" and other main anti-aging and whitening have emerged in an endless stream, and major brands have launched a series of single products around the "star ingredients" chased by the ingredient party.
Constituent parties on Little Red Book
Hyaluronic acid is no longer the only effective substance in the field of moisturizing and anti-aging. Many skincare parties tend to "like the new and hate the old" when selecting products, and are more inclined to try the latest products for products with target efficacy.
A user on Xiaohongshu mentioned that only in the post-recovery period of medical art will they think of using "hyaluronic acid"-related products. From January to February this year, most of the products on Douyin's monthly sales list of beauty products are mainly anti-sugar, antioxidant, and blackhead removal effects, and there are almost no keywords related to "hyaluronic acid". The former "medical beauty Moutai" has gradually degenerated into a "top stream of out-of-gas" that no one discusses.
The situation of hyaluronic acid in the food industry is even more severe. In 2021, after hyaluronic acid was approved as a new food ingredient, many new consumer brands, including Bloomage Biotech, launched related hyaluronic acid snacks, such as Wonderlab sodium hyaluronate sandwich gummies and Bloomage Biotech's Water Muscle Spring.
Health food is the product that is most likely to become an IQ tax. In February last year, the Shanghai Municipal Consumer Protection Commission named Bloomage Biotech for the "hyaluronic acid food chaos", accusing "eating water and light skin" without scientific basis, and hyaluronic acid snacks have become a "food scam". Since then, brands have since phased out the introduction of hyaluronic acid-related foods. Bloomage Biotech's "Black Zero", which is mainly engaged in hyaluronic acid oral liquid, is currently unable to search for its flagship store and related products on Taobao.
The reputation of hyaluronic acid in the food field has plummeted, diluting people's perception of the professionalism of hyaluronic acid. People are gradually realizing that hyaluronic acid that can be effectively supplemented by external application and oral administration is actually very limited. In addition, hyaluronic acid has been popular in the consumer market for more than two years, and consumers have gradually developed aesthetic fatigue.
Skin care products and snacks that focus on hyaluronic acid are becoming more and more difficult to sell.
The "outgas" of hyaluronic acid has a direct impact on Bloomage Biotech's performance. In the past year, the revenue of C-end skin care products was the most sluggish business of Bloomage Biotech.
Bloomage Biotech's C-end business is divided into two parts: skin care products and food, of which the skin care products business accounts for the highest proportion of total revenue; Freda only has a cosmetics business on the C-side, which includes two major brands, Yilian and Dr. Er.
Interestingly, these two large manufacturers also started with the production advantages of hyaluronic acid, and also hit the "cold wave" of the hyaluronic acid market, but their respective brand revenues came out of different curves last year.
In 2023, Freda's cosmetics business revenue will be 2.416 billion yuan, a year-on-year increase of 22.71%. Among them, the annual revenue of Yilian brand was 857 million yuan, a year-on-year increase of 20.35%; Dr. Er's annual revenue was 1.348 billion yuan, a year-on-year increase of 27.33%. On the other hand, Bloomage Biotech's four skin care brands will have a total revenue of 3.757 billion yuan in 2023, a year-on-year decrease of 18.45%.
What did Dr. Maier and Yilian do right? As an old brand in the hyaluronic acid industry, why can Yilian achieve contrarian growth?
Side-by-side comparison finds, we can find three reasons. The first is the difference in the brand matrix. If you buy them separately, it's hard to find out that Dr. Aier and Yilian are from the same company. All of Yilian's products revolve around hyaluronic acid, and the best-selling one is the hydrating spray.
Dr. Maier is completely different, it is aimed at a wider range of people, with microecological skin care as the positioning, related to scientific research and technology, and the large items include both cleansing honey that does not pick the skin, as well as probiotic masks for sensitive skin.
The two brands have different market perceptions, but they complement each other and can accommodate almost all skin groups.
The four skin care brands under Bloomage Biotech are Runbaiyan, Quadi, Mirepair and BM Muscle Active. Among them, Runbaiyan and Quadi are 1 billion-level brands, and they are also the long-term performance leaders of Bloomage Biotech.
Runbaiyan and Quadi seem to be differentiated positioning, but the overlap for the crowd is very high, and the keywords of the core products include soothing and moisturizing. Due to their significant moisturizing and repairing effects, hyaluronic acid skin care products are naturally friendly to sensitive dry skin, but they are much less attractive to some oily skin groups. The oily skin of the city wall is easy to be troubled by closed mouth and acne, and prefers ingredients such as "A alcohol" and "salicylic acid" with irritating and smooth skin, but the product layout of this type of Bloomage Biotech is obviously insufficient, and the core audience is relatively limited to sensitive skin groups.
The second is the layout of sales channels. The two companies choose to focus on different sales scenarios. A large part of Yilian's growth last year came from brand store broadcasts. In the first three quarters of 2023, Yilian's self-sown sales increased by 129.38% year-on-year. In March this year, Yilian also participated in Alibaba's official "Live Broadcast Leading Plan", achieving a three-fold increase in the number of viewers in the live broadcast room.
Bloomage Biotech seized the opportunity of live streaming very early, and greatly opened up brand awareness by binding Li Jiaqi, Wei Ya and other head anchors. After the "de-heading" of various platforms, Bloomage Biotech also began to incubate its own talents, develop store broadcasts, and try to bid farewell to "head dependence".
The data broadcast of Bloomage Biotech is not very optimistic. Feigua data shows that in the past 30 days, the average sales of Douyin Bloomage skin care live broadcast room is about 2.5~50,000 yuan, which is relatively backward in the live broadcast room of a brand of the same scale.
Self-owned talents are the more successful areas of Bloomage Biotech's incubation. Among them, the brand manager with the highest fan loyalty and the best performance in bringing goods is Quadi. In 2022's Double 11, the GMV of a single game exceeded 100 million. In a public speech, Zhi Fanfan revealed the benefits of his personal live broadcast room to Quadi, "Now the GMV is close to 300 million, and the brand doesn't have to pay my commission, so the profit margin is not bad." ”
However, the stability of Dabo is far less than that of store broadcasting, and no matter how high the traffic of Daren is, it is only based on individuals rather than brands. At the beginning of this year, Zhi Fanfan resigned from Quadi, and at the same time took away a lot of "die-hard fans" based on her personal. Bloomage Biotech has lost a very important product promotion and sales channel.
In addition to the numerous departures, there is another obvious change in Quadi's sales channels in 2023, that is, the removal of dealers. In 2021, Quadi's micro-business agents accounted for 90% of the distribution channels, which also led to Quadi being often labeled as a "micro-business". Improper publicity, low price snatching customers and impacting the price system all affect Quadi's "high-end" brand awareness.
Along with the adjustment of sales channels, there is also the marketing volume of Bloomage Biotech.
In 2023, Bloomage Biotech's sales expenses will decrease by 6.8% year-on-year to 2.84 billion yuan. Freda's sales expenses in 2023 will maintain an upward trend, increasing by 10.1% year-on-year to 1.45 billion yuan.
Among the listed beauty companies, the decline in Bloomage Biotech's sales expenses is very eye-catching, which means that Bloomage Biotech has taken the initiative to lower its posture in the battle for domestic product traffic.
Nearly half of the revenue of new consumer brands is marketing money, and Bloomage Biotech is no exception. After focusing on online channels, Bloomage Biotech's sales expenses increased from 1.099 billion yuan in 2020 to 3.05 billion yuan in 2022.
Runbaiyan and Quadi have always been the two positions with the highest marketing investment in Bloomage Biotech, and there are not a few marketing cases out of the circle. A few years ago, Run Baiyan was the first brand to eat crabs and cooperate with the Palace Museum for "Palace Museum Lipstick".
However, with the "outdated" hyaluronic acid, Bloomage Biotech's huge marketing investment has become more and more difficult to reap the transformation effect from the past. In the first half of 2023, Bloomage Biotech's sales expenses increased by 2.4% year-on-year, but the sales of the four brands all decreased year-on-year.
Bloomage Biotech brand revenue breakdown in the first half of 2023
After entering the second half of 2023, Bloomage Biotech's marketing is no longer as "powerful" as before. There have never been any planned short films related to women's issues on the video accounts of Runbaiyan and Mirepair. During the 38 promotion period this year, there is no promotion-related push on the Runbaiyan official account.
In this regard, founder Zhao Yan responded in a recent interview. She believes that Bloomage Biotech's skin care brand still has a lot of room for improvement in terms of marketing ecology, marketing organization and scientific and technological communication, and the process and team will be significantly adjusted.
The resignation of the core manager, the "comprehensive dismissal" of dealers, and the overall marketing slowdown...... Bloomage Biotech's consumer brand seems to be experiencing an "elephant turn". In a recent interview, Zhao Yan attributed the decline in the C-end business to the company's "active change". "If we continue to increase investment, the brand's revenue data will continue to move forward along the growth inertia of the industry." However, for the sake of long-term development, the change and adjustment of timely stop loss can shift from high-speed growth to high-quality and healthy development.
There are generally two development paths for scientific research companies in the medical cosmetology track, one is to face the medical scene and do B-end business of injections and tool reagents; The other is the direct-to-consumer TO C model, which leverages the advantages of the supply chain to build a brand related to ingredients. Among the four major hyaluronic acid manufacturers, Bloomage Biotech and Freda, which are "from the same source", are both C-end and B-end.
In addition to its self-built skin care brand, Bloomage Biotech is also the raw material supplier with the largest market share of hyaluronic acid in China. Last year, Bloomage Biotech's two major businesses (raw materials and medical terminal products) on the B-end continued to grow year-on-year.
However, there is a factor that cannot be ignored on the B side, that is, the decline in gross profit margin. In recent years, the gross profit margins of Bloomage Biotech and Haohai Biotech have declined significantly.
The main reason is that the price of hyaluronic acid is getting cheaper and cheaper. The promotion of fermentation technology has lowered the production threshold of hyaluronic acid, and more and more companies have realized the large-scale production of hyaluronic acid, with increased yield and scale, and the price has naturally been "knocked down". According to Frost & Sullivan's report, the average price of hyaluronic acid raw materials has gradually decreased from 210 yuan/gram in 2017 to 124 yuan/gram in 2021, a decrease of more than 40%.
Sooner or later, the rising demand will not be able to cover the price change, and if the market price of hyaluronic acid drops, the performance of the four major manufacturers will decline significantly. Several companies are looking for new growth curves.
The research direction of Aimeike and Haohai Bioscience is mainly software and reagents for medical aesthetic use. The main research direction of its own consumer brands, Bloomage Biotech and Freda, is the active substances that can be used in skin care products.
Bloomage Biotech's dedication to other active substances can be seen from the annual patent and R&D details. In a recent interview, Zhao Yan bluntly said, "In addition to hyaluronic acid, Bloomage Biotech has a dominant position in many bioactive substances, such as ectoin, ergothioneine, GABA and other strategic substances. This advantage is reflected in whether the comprehensive leadership of quality and total cost can be achieved from small-scale test, pilot test, to large-scale mass production, and whether it can realize the efficacy solution of active ingredients in complex scenarios. ”
Every time Zhao Yan hears others describe Bloomage Biotech as a "hyaluronic acid medical beauty company", she feels a headache. In public, she will repeatedly emphasize the company's "synthetic biotechnology" undertone. Last year, Bloomage Biotech landed a 12,000-square-meter R&D industrial base in Jinan. Obviously, Bloomage Biotech does not want to stick to a single ingredient to expand its territory, but wants to be a synthetic biology platform based on "talent-technology-transformation".
However, in the minds of most consumers, the current Bloomage Biotech is still a "hyaluronic acid +" company, rather than an "all-inclusive" synthetic biology platform. It is not easy to open consumers' cognition of Bloomage Biotech other than "hyaluronic acid".
First of all, it is a long process for any new ingredient to be researched, to the formulation upgrade, and to the product. For example, the recently popular recombinant collagen, Bloomage Biotech started the research and trial of recombinant collagen in 2021, and it was not until April this year that Runbaiyan launched the first secondary essence focusing on recombinant collagen.
Even with reliable technology and products, the occupation of the mind does not happen overnight.
It has taken more than ten years for Juzi Biotech to obtain the key patent of recombinant collagen and become the leading player in the recombinant collagen track with its large single product. The advantages of core technology, coupled with the long-term diversified channel layout, can form a solid brand mentality.
Recently, however, Zhao Yan said in a public interview that she will no longer easily market an ingredient as the company's core technology. When the essence of "Yuanqi Bomb" was first launched, some users on Xiaohongshu were surprised, "It turns out that Runbaiyan has also entered the circle of collagen?" ”。
According to the annual report, at present, the research and application of recombinant collagen at the B-end of Bloomage Biotech are advancing faster. It is not stingy with the research and development of new ingredients, but Bloomage Biotech is becoming more and more cautious in its investment in the consumer market.
Bloomage Biotech also wants to tell the market its R&D advantages in recombinant collagen, but it doesn't want to "hold high" against this ingredient. Just like when hyaluronic acid is in the limelight, hyaluronic acid is the confidence for Bloomage Biotech, but after this wind blows, hyaluronic acid is an obstacle and restriction to tell a new story.
Bloomage Biotech is in a dilemma.