Any company with a little ambition loves to label itself, because once it is labeled, it opens up the imagination space for infinite growth. This phenomenon is particularly prevalent in the secondary market, where the broad label includes a variety of "concept stocks", and the narrow label is the "first stock". Over the years, we have witnessed countless cases of companies that have been labelled and their market capitalization has skyrocketed.
In the beauty industry, which is controlled by marketing, companies do their best to create labels without labels, which is comparable to a chair game. Browsing through the beauty promotional materials, you can see that the brand is looking through various angles such as categories (eye creams, ** concepts (anti-sugar, anti-oxidants), ingredients (collagen, peptides), etc., in order to find their own label and create an exclusive glory.
Some people rushed to the examination room in the starry night, and some people resigned and returned to their hometowns. With the most advanced manufacturing technology and the largest market share (44% of the world) of hyaluronic acid (same as hyaluronic acid), Bloomage Biotech is the person who holds the label of beauty raw materials the most. However, the enthusiasm of the constituent party failed to support the decline of the first share of hyaluronic acid: in a year and a half, the market value of Bloomage Biotech has shrunk from 150 billion yuan to 32 billion yuan today.
What's the secret behind this? Why does the magic of beauty ingredients fail in the field of hyaluronic acid? What else does Bloomage Biotech, which is eager to tear off the label of raw materials, have to watch?
Let's start by looking back at the best beauty ingredient companies and looking for the characteristics that exist in their growth and growth.
Case 1: DSM
The world's leading vitamin manufacturers have equated the highest grade of niacinamide in the beauty industry, and most cosmetics on the market that emphasize the whitening effect are more or less added to niacinamide, and tacitly regard Dutch imports (DSM) as an endorsement of the quality of raw materials.
In previous studies of niacinamide, we have detailed this raw material, although there are many whitening ingredients, but there are few that agree with the mechanism of action of niacinamide (blocking the transport of melanin from the basal layer to the stratum corneum), so even if new whitening concepts continue to be introduced, niacinamide can develop firmly in a wide space without interference.
In this spatial narrative, the iteration of technology is also linear enough, and those who master the most advanced preparation technology have absolute pricing power.
With a history of 118 years, DSM has built a series of standards and systems for nicotinamide from basic research to process and application, and the preparation technology has also been upgraded all the way, from petroleum-based chemical catalytic synthesis, to the catalytic production of 3-cyanopyridine by using nitrile hydratase, to direct biotransformation of cell bodies, and finally to today's synthetic biotechnology, leaving 1-2 iterations of the market average.
And DSM produces niacinamide with a purity of up to 99%, which means higher ingredient stability and lower products***, so it has established the position of customers holding money for cooperation.
Case 2: Jinbo Biotech, Giant Biotech, etc
Due to the rapid popularity of the concept of recombinant collagen, it smoothly landed in the capital market and completed the soaring market value. The development path of recombinant collagen as a beauty ingredient can be simply summarized into three stages:
1.0. Technological breakthrough: realize the transformation of animal-derived collagen to recombinant collagen, and solve the first problem - easy infection;
2.0. Optimization of preparation process: invent preparation technology to improve the expression rate of recombinant collagen, and break through the second problem - the bottleneck of mass production;
2.1. Market education: around the application end, the polarization debate on the stability and permeability of collagen molecules;
3.0. Technology and preparation process re-optimization: After having the molecular mechanism of the triple helix, we will continue to break through the fourth-order spatial structure and self-crosslinking technology.
At present, China has mastered the most advanced technology, leading the development of the industry to 2Phase 1, which is in the transition stage of mass production application market verification.
However, beauty is such an industry where ambiguity is imagination and imagination is the power of realization: there is still technology to be broken through in front of us, and there is endless debate about whether it is effective in front of us, but it does not affect the good performance of companies with earlier layouts such as Jinbo Biotechnology and Juzi Biotech in the capital market, and it does not prevent brands such as Proya, L'Oreal, LVMH, and Shiseido from running into the market.
These two long-term and verified examples can reflect that the fundamental logic of the high valuation of raw material manufacturers lies in their muscles in the window of time and space: Achieve technological breakthroughs in space, have growth expectations in time, and then fall on the essence of business (exchange and value creation) to exchange for different degrees of LTV (user lifetime value).
Looking at Bloomage Biotech from this point of view, its share price has tripled in just one year after landing on the A** market, and its market value has increased from 40 billion yuan to 150 billion yuan.
Let's first understand this raw material, hyaluronic acid, also known as hyaluronic acid, is a kind of polymer mucopolysaccharide composed of N-acetyl glucosamine and D-glucuronic acid as structural units, widely found in vertebrate connective tissues and body fluids, due to its good water retention, lubricity, viscoelasticity, biodegradability and biocompatibility are widely used, hyaluronic acid is divided into the following three categories according to use:
Medical-grade hyaluronic acid raw materials: injection-grade products used in medical cosmetology (medical cosmetology fillers and skin boosters), orthopedics, ophthalmology** and other fields, with the highest standards of raw material accusation, production and registration;
Cosmetic-grade hyaluronic acid raw materials: through further modification and improvement of the original ingredients of hyaluronic acid, it is used in the manufacture of skin care cosmetics;
Food-grade hyaluronic acid raw materials: mainly used in health food to supplement the ingredients required by the body.
According to Frost &Sullivan data, the market turnover of hyaluronic acid in 2021 will be 720 tons, of which 384 tons will be sold by Bloomage Biotech, accounting for 44%. When the constituent party awakened and the medical beauty industry germinated, Bloomage Biotech became the biggest dividend sharer of the beauty economy.
The advantage of being the first in the industry is that when the industry is rising rapidly, it provides sufficient imagination space for enterprises, but once the industry increment is limited, then the ceiling of the first is also delineated. Whether it is the application field of beauty or medical beauty, the time window for the crazy growth of hyaluronic acid as a basic raw material is slowly closing, and the supply dividend of raw materials is disappearing.
On the one hand, in the beauty industry, which is full of freshness, the imagination contained in many ingredients will be diluted by time. Under the ingredient concept of skin care, the demand side is forcing the upstream to carry out product innovation, and a variety of new ingredients are competing for the C position in the ingredient list, such as anti-aging new star recombinant collagen, hydrating and moisturizing ceramides, and shornane sharks are all squeezing the growth space of hyaluronic acid in overlapping fields.
On the other hand, with the improvement of market maturity, the raw material gap between Bloomage Biotech and other companies is getting weaker and weaker. The data shows that although Bloomage Biotech occupies the largest market share, it is not irreplaceable in the raw material side, and it can be seen that Bloomage Biotech was once the largest supplier of the beauty company Fuerjia and the medical beauty company Aimeike, but with the business competition problems after the latter went public, Bloomage Biotech slowly disappeared from the top five major companies.
The release of upstream production capacity and the weak demand of downstream terminals mean that it is difficult for the super hyaluronic acid industry to harvest the market by high premiums, and the industry leaders are not immune. According to the financial report, in the first half of 2023, the overall gross profit margin of Bloomage Bio's raw material business will be 6565%, in the same period last year, the overall gross profit margin of Bloomage Bio's raw material business was still 7239%。
Growth is limited and premiums are gone, It is no wonder that Bloomage Biotech's performance in the secondary market is as good as hyaluronic acid raw materials.
However, the development of things is dynamic, the story will not end, it will only come to an end, and then start again in a new field, Bloomage Biotech has selected two new fields, one is to C's beauty products, and the other is to adhere to B's active ingredient research and development.
From the perspective of input-output ratio, functional skin care products are beneficial to Bloomage Biotech's performance in terms of To C.
At present, it has mainly formed four major brand matrices of Runbaiyan, Quadi, Muscle Activation, and Medrepair, and the products are distributed in the 100-850 belt, spanning the mid-to-high-end market positioning. From 2019 to 2022, the revenue scale of Bloomage Biotech's functional skin care products business increased from 63.4 billion yuan was rapidly increased to 460.7 billion yuan, accounting for 3362% to 7245%, has become the company's absolute revenue cash cow.
Figure: Bloomage Biotech's marketing expenses, **Bloomage Biotech's financial report
Judging from the 2022 annual report, Bloomage Biotech's marketing expenses account for nearly half of its revenue, which is much higher than that of comparable companies in the same industry.
However, Bloomage Biotech's continuous marketing strategy did not form a clear brand memory point, and the effect of stimulating the market finally ushered in the end of marginal diminishing. In H1 2023, the revenue of Bloomage Biotech's functional skin care business did not continue the previous momentum, but fell by 756% to 196.6 billion yuan, and the revenue contribution ratio also fell to 64%.
The key business could not be sustained, and the company's overall performance declined, with a total revenue of 30 in the same period7.6 billion yuan, a year-on-year increase of 477%；Net profit attributable to shareholders of listed companies42.5 billion yuan, a year-on-year increase of **1027%。Compared with past performance, Bloomage Biotech's revenue growth rate not only hit a new low since its listing, but also showed a net profit for the first time.
In the financial report for the first half of 2023, Bloomage Biotech defined itself as a "biotechnology company driven by synthetic biotechnology innovation".
But overall, as a biotechnology company, Bloomage Biotech's prospects are still too uncertain.
Previously, Bloomage Biotech and South Korean biopharmaceutical company Medytox cooperated in the matter of botulinum toxin type A for injection, which fell through at the door; At present, the recombinant collagen ingredients it is betting on are preceded by Jinbo Biotechnology and Juzi Biological; Other active ingredients such as ectoin and ergothioneine are also rivals.
There is no successful enterprise, only the enterprise of the times. Zhao Yan, the founder of Bloomage Biotech, may know the meaning of this sentence best, Hainan resold the refrigerator to earn the first pot of gold, and then stepped on the real estate dividend and economic economic dividend to start a successful business, leading Bloomage Biotech from a loss-making research institution to the most influential beauty company.
Can the next-generation inter-generation dividends still fall on the head of Bloomage Biotech? It may take some time to reveal the answer, but what is certain is that Bloomage Biotech is now walking on a tightrope.