The market capitalization evaporated from 150 billion to 268100 million, the "first share of hyaluronic acid" Bloomage Biotech, what "pits" did it encounter after going to the C-end?
After entering the C-end market for several years, Bloomage Biotech (688363SH) at one time soared.
With the pull of the functional skin care products business, Bloomage Biotech's revenue has increased year after year, exceeding 6 billion in 2022, and its market value will exceed 150 billion at its peak.
However, after entering 2023, Bloomage Biotech has begun to grow sluggishly. The 2023 semi-annual report shows that its revenue growth rate has increased from 28 in the previous year53% plummeted to 477%；In the third quarter report, the revenue even appeared 229% negative growth.
Since 2023, Bloomage Biotech's share price has fallen by more than 51% so far, and its market value has shrunk to 268100 million, less than 20% of the highest.
The king of hyaluronic acid, can't sell anymore? After entering the C-side, what pitfalls did Bloomage Biotech encounter?
The product layout is large and complete, but the stamina is insufficient
Founded in 2000, Bloomage Biotech's main business was to provide raw materials and end products to the medical aesthetic field at home and abroad.
With its own technological breakthroughs and production advantages in the field of hyaluronic acid, Bloomage Biotech was once a leader in the 2B field. According to data from research institute Frost &Sullivan, Bloomage Biotech has been the world's largest hyaluronic acid manufacturer and sales company since 2021, accounting for 44% of sales that year.
Bloomage Biotech entered the C-end because the B-side was not so profitable. Taking the cosmetic-grade raw material products with the largest proportion of revenue as an example, its unit price has decreased from 2,541 yuan kg in 2016 to 2,226 yuan kg in 2019, a decrease of about 124%, while the cost has risen by 33%。Looking at the raw materials business as a whole, its revenue growth rate has also increased from 16 in 201981% slowed to 831%。
The raw materials of hyaluronic acid have been declining year by year, and the demand for the B-end has gradually peaked, forcing Bloomage Biotech to seek a new growth curve from the C-end.
As early as 2018, Bloomage Biotech cooperated with the Palace Museum to launch the Palace Museum's treasure color lipstick, which sold more than 100,000 pieces within three months. After successfully testing the waters, Bloomage Biotech set its sights on the C-end and entered the red sea of skin care products.
After several years of development, Bloomage Biotech's C-end layout can be described as "large and complete". In terms of its functional skin care, a number of sub-brands such as Runbaiyan, Medrepair, BM Muscle Activation, and Quadi have formed a Bloomage skin care family, including disposable stock solution, various creams and lotions, hand masks, sprays, and even makeup products.
Bloomage Biotech's C-end business has been soaring in the first 3 years, but unfortunately it lacks stamina and will encounter a revenue "Waterloo" in 2023.
Let's look at the data. From its listing in 2019 to 2022, Bloomage Biotech's revenue growth rate has reached respectively. 93%, the highest market value of the enterprise exceeded 150 billion yuan; Among them, functional skin care contributes to the annual revenue. 45% of the revenue has gradually become the main revenue force of Bloomage Biotech.
However, entering 2023, Bloomage Biotech has slowed down, and the revenue growth rate in the semi-annual report shows that it will drop to 477%, net profit also turned around, a year-on-year decrease of 1027%。This is also the first time that Bloomage Biotech has experienced a sharp decline in performance since its listing.
The performance of the four major skincare brands has also declined to varying degrees. Among them, the worst-performing BM muscle activity has a revenue of 34.1 billion yuan, down 2962%；The least affected is Runbaiyan, with a revenue of 63.2 billion, also appeared 204% decline.
The revenue of Bloomage Biotech's four major skin care brands in the first half of 2023, the source is Bloomage Biotech's financial report.
The king of hyaluronic acid, why can't it be sold? In the skin care product market, in addition to the support of technical ingredients, consumption outlets and brand differentiation also play an important role in sales.
Let's talk about consumption outlets first. When Bloomage Biotech first entered the C-end market, it once set off a hyaluronic acid skin care boom. In terms of performance, the revenue growth of functional skin care products business in 2019 reached 11853%, and it will also maintain a high growth rate in 2020 and 2021, reaching 112 respectively19% and 14657%。
However, the trend of beauty is changing, and with the rise of new skincare methods such as "morning C and night A" at the end of 2021, hyaluronic acid seems to be gradually falling out of favor. By 2022, the revenue growth rate of Bloomage Biotech's functional skin care products will also slow down to 3880%。
The contrast is more intuitive on the sales side. According to Tmall data, in the 2021 "618" promotion, Quadi ranked first among the best-selling beauty brands, and Runbaiyan, which is also a subsidiary of Bloomage Biotech, also ranked sixth; In the "Double 11" of that year, Runbaiyan ranked TOP1 on the domestic list of Tmall facial essence. In 2022, "Double 11", Proya, which focuses on "morning C and evening A", has taken the limelight and climbed to the top 1 of beauty hot sales; In the top 20 of this list, there is no trace of the Bloomage Biotech brand.
Let's talk about brand differentiation. Bloomage Biotech has four major skin care brands, Runbaiyan focuses on "hyaluronic acid technology repair aesthetics", Quadi promotes anti-aging and anti-aging, Mirepair emphasizes the image of "sensitive skin expert", and BM muscle activity highlights "playing with young people". Although there are many gimmicks, they are still spinning in its proud hyaluronic acid technology, and the homogenization is serious.
Quadi, which has been vigorously marketing recently, has achieved revenue growth from 150 in 2022 after creating the glory of "Double 11" in 202119% to 3913%, and by mid-2023 it also appeared -1010% growth. If you want to rely on Quadi to turn around the revenue waterloo, I am afraid it will be difficult.
Another piece of Bloomage Biotech's C-end business, functional food, is also mediocre.
In 2021, Bloomage Biotech launched the hyaluronic acid water brand "Shuijiquan", the food brand "Black Zero" and the fruit drink brand "Fantasy Corner" to open up the food line. Since 2021, the revenue proportion of functional foods has been less than 1 at the peak4%, which is almost negligible compared to other businesses.
What's more, people will inevitably have more doubts about the hyaluronic acid they eat in their mouths. In February 2023, the Shanghai Municipal Consumer Protection Commission issued a series of issues in *** "Can hyaluronic acid food really 'eat water and light skin'?" "Who is saying that hyaluronic acid foods can 'eat water and light skin'? "What methods do businesses use to achieve 'accuracy'. Bloomage Biotech's "Water Muscle Spring" was also named and asked to provide proof of efficacy.
Bloomage Biotech's "Shuijiquan" was named and questioned, the source of the picture is "Shanghai Municipal Consumer Protection Commission"**
The controversy over the efficacy of "Water Muscle Spring" is also reflected in the consumer side. Whether it is a comment or an experience post on Xiaohongshu, there are also many posts that reflect consumers' doubts about the "IQ tax" of hyaluronic acid.
*, the comments on the "Water Muscle Spring" product on Xiaohongshu, screenshot from Xiaohongshu, **
While the revenue of the main skin care line has been frustrated, the food line has not become a new growth point.
But that's not all.
After going from offline to online, he suffered from "big anchor dependence".
Since the development of the C-end business, Bloomage Biotech's channel play has also changed.
In the past, Bloomage Biotech occupied the upper and middle reaches of the industrial chain, exporting medical terminal products and pharmaceutical, cosmetics and food-grade hyaluronic acid raw materials to relevant manufacturers or institutions. Taking the medical terminal as an example, Bloomage Biotech sells its products directly to public and private medical institutions, or sells them out to distributors, who then sell them to end customers.
Now, Bloomage Biotech still has to open up the "last mile" to let its products reach individual consumers.
Bloomage Biotech's approach is to fully connect online and offline, direct sales and distribution. Since 2019, Bloomage Biotech has opened direct sales through e-commerce platforms such as Tmall and Douyin, as well as WeChat mini programs and Youzan, while it has mainly been distributed.
So far, online direct sales has become the main shipping method of Bloomage Biotech's C-side. According to the 2022 annual report, the direct sales revenue is about 464.9 billion, accounting for 73 percent of total revenue11%。
Live streaming is one of the important ways to sell online. Since 2020, Bloomage Biotech skin care products have appeared in the live broadcast room of the head anchor many times.
According to the most advanced statistics, in August 2020 alone, Bloomage Biotech launched a total of 8 times in the live broadcast rooms of Li Jiaqi and Wei Ya, of which Quadi 4 types of products landed in Li Jiaqi's live broadcast room 4 times, and Muscle Active and Runbaiyan landed in Wei Ya's live broadcast room 2 times each.
Bloomage Biotech products appeared in Li Jiaqi's live broadcast room, the source network
The live broadcast "brushed face", and the response was very good at first. According to public reports, in 2020, in Li Jiaqi's live broadcast room alone, the total sales volume of Quadi hyaluronic acid disposable stock solution series has reached 24 million. During the "Double 11" period of that year, the sales volume of the whole platform of Runbaiyan was 2500 million yuan, Tmall's "Double Eleven" sales exceeded 100 million yuan in just 18 minutes, and the total sales of "Double Eleven" increased by 137% year-on-year, ranking first in the list of domestic products of Tmall facial essence.
Perhaps because of the sweetness of the live broadcast V, Bloomage Biotech has worked harder to develop live broadcast sales channels.
In 2022, the revenue of Bloomage Biotech's functional skin care products will be 4.6 billion, an increase of 38% over the previous year80%。According to the financial report, the performance growth "is mainly due to channel operation, this year, while the company is deeply engaged in the Tmall platform, it attaches great importance to the layout of Douyin e-commerce channels, establishes a live broadcast operation team, and maintains cooperation with talent live broadcasts, and the revenue of skin care products business in Douyin and Tmall channels has grown rapidly."
But blessings and misfortunes often depend on each other. Big V can drive sales in a short period of time, which seems to bring "wealth and wealth" to Bloomage Biotech, but the intensity of live broadcast price reduction, as well as the cost of pit fees and sharing, will dilute the final profit margin.
Taking the 20ml Quadi Moisturizing Moisturizing Essence as an example, it was 4 after the discount in the live broadcast room of Li Jiaqi in last year's "Double 11".95 yuan ml, compared with the original price of Tmall*** after conversion 1227 yuan ml, ** down by more than half.
In terms of revenue, according to the Guojin ** research report, the total GMV of Tmall*** and Douyin of the four major skin care brands of Bloomage Biotech during the "Double 11" period decreased by 36% year-on-year. According to the third quarter report of 2023, the revenue for the quarter was about 114.6 billion, while the net profit is less than 90 million, accounting for less than 8%, and the big promotion live broadcast has failed to make Bloomage Biotech's profit increase significantly.
In this way, for Bloomage Biotech, the head anchor is a shortcut to open up the voice and reach consumers, but it may not be a long-term plan to make a profit.
Extensive marketing has fallen into the pit of "burning money".
The transformation from serving B-end customers to serving C-end consumers means that Bloomage Biotech needs to reconstruct consumer cognition, which is naturally inseparable from marketing. In addition to frequently brushing his face in the live broadcast room of the big anchor to open up the voice, Bloomage Biotech also made efforts to do variety shows, IP, etc.
For example, outside the live broadcast room, Bloomage Biotech still frequently holds hands with big Vs to stir up the heat. In October last year, Run Baiyan walked into Li Jiaqi's online variety show "All Girls' Offer 3", and started a PK of bargaining and price insurance with Li Jiaqi; After Quadi launched the new formula of blue copper peptides, he teamed up with Li Jiaqi to launch the short film "Ingredient China: Formula Game", which sold ingenuity and domestic feelings.
Seizing the social media platform and relying on opinion leaders to "plant grass" to promote is also one of the important marketing methods for medical beauty and skin care products. For example, searching for "Runbaiyan" on Xiaohongshu can show more than 40,000 notes and more than 800 product links. Many posts use "hands-on experience" to record the efficacy and usage of hyaluronic acid skin care in detail.
Xiaohongshu, ** on the experience post about "run Baiyan", screenshot from**, Xiaohongshu
According to public reports, in 2021, Runbaiyan's brand explosive products have been able to be "planted" by nearly 250 KOLs (key opinion leaders) and more than 150 KOCs (key opinion consumers), and achieved more than 200 million total ** and 3 million total interactions.
The direct consequence of aggressive marketing is to "burn money" and compress profit margins. Some beauty marketing insiders said that at present, the top tide of MCN institutions is rising, and the selling price is further depressed, and the profit margin of the brand is also further compressed; In the worst-case scenario, brands will spend less on research and more on marketing, all of which will need to be paid for by consumers.
According to Bloomage Biotech's financial report, sales expenses in the first half of 2023 will reach 14200 million yuan, accounting for about 54% of the total operating cost; Among them, the online promotion service fee is about 73.9 billion, accounting for more than half of the sales expenses, advertising expenses also amounted to 23.1 billion.
If compared with peers, Bloomage Biotech's marketing rate will reach 47 in 202295%, which is far more than the 839%, 319% and Bethany's 4084%。
The 2022 marketing rate of Bloomage Biotech and other companies in the same industry, source Bloomage Biotech's 2022 annual report
On the other hand, the shrinking net profit margin is in stark contrast to the rising sales rate. From 2019 to 2022, Bloomage Biotech's net profit margin were: 27%, declining year after year, while the sales rate has dropped from 2765% year-on-year** to 4795%。
In addition, the high sales rate has also eroded R&D expenses, making Bloomage Biotech fall into the situation of "emphasizing marketing and ignoring R&D". Since 2019, R&D expenses have been increasing at a rate of about 1019. 5% with selling expenses. 62 % vs. 2517% compared to years behind. And in terms of volume, the highest R&D expenses are only in 100 million yuan, which is far less than the billion level of sales expenses.
As mentioned above, Bloomage Biotech is made of hyaluronic acid, but it is also limited by hyaluronic acid, and its brands are seriously homogeneous. In the skin care product market, where the gods are fighting, neglect of research and development and hinder innovation may only worsen the current situation of shrinkage.
Bloomage Biotech may also be aware of the long-term hidden dangers of extensive marketing. In its 2023 semi-annual report, it said that in the future, it will focus more on large single products on the product side to reduce cost waste; On the channel side, it is necessary to increase the proportion of daily sales, self-broadcasting and other sales methods, and strengthen brand repurchase. Through various measures, we have decided to reduce the sales rate.
From this point of view, from products, channels to marketing, there are still many "holes" to be filled in the C-end road of Bloomage Biotech, which can be said to be a long ......way to go
This article was originally published by Magnesium Jing (mgjing001).
Author: Carren Tam.
Editor: Wang Damei.
Design: Lan Sheng.
Kejihui Zhang Zipeng newsmedia007
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