Haohai Biological Industry's performance growth stalls: Ophthalmology and Orthopedics businesses cool down under centralized procurement, hyaluronic acid business growth significantly slows down

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Under the combined pressure of tighter policy regulation, weak consumer demand, and the fading of industry tailwinds, China’s medical aesthetics (beauty medicine) industry is going through a deep adjustment cycle. In 2024, for Haohai Biological Science—one of the “three musketeers” of hyaluronic acid—is a year full of challenges. According to the annual report data, the company achieved full-year operating revenue of 2.698 billion yuan, a slight year-over-year increase of 1.64%, which is only higher than 2020 affected by the COVID-19 pandemic in history; net profit attributable to shareholders was 420 million yuan, up only 1.04% year over year.

From a single-quarter perspective, the company’s performance came under comprehensive pressure in the fourth quarter. Operating revenue for the period was 623 million yuan, down 7.3% year over year; net profit attributable to shareholders was 79.56 million yuan, down 10.9% year over year; and net profit attributable to shareholders after deducting non-recurring items was 57.68 million yuan, down 26.8% year over year. Behind this nearly stagnant set of results are multiple pressures reflecting the fading of industry tailwinds in medical aesthetics, the impact of centralized procurement policies, and intensifying market competition.

By business segments, due to the effects of centralized procurement, Haohai Biological Science’s ophthalmology business revenue declined. In 2024, ophthalmology business revenue was 858 million yuan, down 7.60% year over year. As the second-largest supplier of artificial lenses in China, Haohai Biological Science’s five brands of artificial lenses won the bid in the national centralized procurement for volume-based purchasing in mid-November 2023. Although sales volumes of mid-end pre-filled products grew 137% and high-end dual-focus products grew 40%, the winning bid price fell by more than 50% compared with before centralized procurement, directly leading to a 14.06% decline in revenue.

The orthopedics business is also mired in policy constraints. In 2024, after the provincial centralized procurement of sodium hyaluronate injection in places such as Zhejiang took effect, Haohai Biological Science’s anti-adhesion material revenue fell 4.77%, and its medical-grade hyaluronate sodium gel revenue decreased by 4.35%. Although the company claims that “multiple mid-to-high-end product R&D is proceeding in an orderly manner,” the technology barriers in orthopedics are relatively low, and with competitors such as Weigao Group and Chunli Medical surrounding it, Haohai Biological Science can hardly be said to have an advantage.

A more far-reaching impact is that centralized procurement policies are reshaping the industry ecosystem. Taking centralized procurement of artificial joints as an example, the average bid price drop reaches 82%, forcing companies to exchange volume for price. If Haohai Biological Science cannot break through in material innovation or surgical solutions, its orthopedics segment may become a drag on growth.

Against the backdrop of pressure on both the ophthalmology segment and orthopedics business, the medical aesthetics business performance has been quite solid, becoming “the village’s hope.” In 2024, Haohai Biological Science’s medical aesthetics segment achieved revenue of 1.195 billion yuan, up 13.08% year over year; its share of total revenue further increased to 44.38%, completing a brilliant turnaround from a share of less than 20% in 2020, and staying firmly as the company’s largest business segment.

Among them, hyaluronic acid products contributed 742 million yuan, accounting for as much as 62.05%, up 23.23% year over year. However, it is also important to note that behind the impressive figures there are many hidden concerns. In terms of growth rate, in 2023 the company’s hyaluronic acid products achieved revenue of 602 million yuan, up 95.54%; by contrast, in 2024 revenue still maintained double-digit year-over-year growth, but the growth rate has significantly slowed.

From a market perspective, hyaluronic acid used to be the “golden track” in the medical aesthetics industry, but now it has fallen into serious oversaturation. As of 2024, more than 50 Class III medical device certificates for approved hyaluronic acid products had been granted domestically, and there were over 400 circulating brands. Even in the high-end market, opportunities are not a blue ocean. International giant Allergan’s “JUVEDERM (乔雅登丰颜)” and Sweden’s Q-Med’s “RESTYLANE (瑞兰丽缇)” firmly occupy the price band above 8,000 yuan, while domestic manufacturers such as Merz Pharmaceuticals (愛美客) and Hancoll Biopharma (华熙生物) are also accelerating their high-end expansion.

An even more serious threat comes from the rise of substitute products. In recent years, “puffy/‘fattened face’ issues” caused by excessive hyaluronic acid filling have repeatedly drawn criticism from consumers, and hydroxyapatite (commonly known as “the girl’s needle”), which stimulates collagen regeneration, has gradually become the industry’s new favorite. According to Frost & Sullivan, by 2027, the size of China’s collagen market will reach 173.8 billion yuan, with the proportion of recombinant collagen exceeding 60%.

Although Haohai Biological Science has already laid out intelligent crosslinking collagen products, its R&D progress lags behind early movers such as Jinsibo Biotech (锦波生物). Whether it can catch up remains unknown. In addition, the collagen segment has also shown signs of overheating. As of the end of 2024, there were as many as 17 Class III recombinant collagen product certificate applications accepted by the NMPA, and worries about a price war are emerging.

Furthermore, although Haohai Biological Science has offset the performance pressure brought by centralized procurement through its high-gross-margin hyaluronic acid business, when the hyaluronic acid business needs to grow at double-digit rates each year to barely offset the decline in traditional businesses, whether this “using profit from one side to cover losses on the other” growth model can be sustained is also worth thinking about.

In addition to hyaluronic acid, the other pillar in the company’s medical aesthetics segment—radiofrequency and laser equipment—has also performed lacklusterly, suffering a setback due to policy adjustments. In March 2022, the National Medical Products Administration upgraded the regulatory category for radiofrequency therapeutic devices from Class II to Class III, requiring that starting from April 1, 2024, products that have not obtained a medical device registration certificate may not be produced, imported, or sold.

This policy may directly affect the company’s global expansion strategy. Haohai Biological Science’s radiofrequency beauty device originally saw rapid growth in the China market via its Israeli subsidiary EndyMed, but after the regulatory threshold increased, its products had to reapply for Class III certificates, causing market promotion to stall. At the same time, overseas markets also face pressure from tightening U.S. and E.U. regulations. With both internal and external pressures, the radiofrequency equipment segment is unlikely to see a recovery in the short term. Although the policy transition period has been extended to 2026, revenue for related businesses in 2024 still declined by 6.97% year over year.

Looking ahead, amid ongoing pressure from centralized procurement policies, accelerating fade-out of medical aesthetics tailwinds, weak growth in traditional businesses, and intensifying industry competition, the hyaluronic acid business may also struggle to stand alone. When the industry shifts from the “easy-win era” to a “battle-tested mode,” whether Haohai Biological Science can consolidate its leading position will still need to be proven over time.

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