How to position has become the key to breaking the game.
Written by Jiayan Wang.
Edited by Lu Yao.
As the world's largest manufacturer of hyaluronic acid raw materials and the first stock of medical cosmetology, the controversy over Bloomage Biotech has never stopped.
According to the financial report data, in 2023, the revenue growth rate of Bloomage Biotech's four major skin care brands will decline significantly, and the net profit will show negative growth for the first time. Compared with the market value of 140 billion at its peak, Bloomage Biotech's market value evaporated by more than 100 billion yuan in two years, shrinking by nearly 70%.
However, the reality is that the domestic skincare market is entering the fast lane of rapid development, and in 2023, the size of China's skincare market has exceeded 280.4 billion yuan, a year-on-year increase of 93%。For example, domestic brands such as Proya and Bethany have also achieved double-digit revenue growth in the first three quarters of 2023, with revenue growth rates of 3247%，18.51%。
In other words, when the domestic skin care market is booming, Bloomage Biotech is slowing down. In the face of doubts from the outside world, Bloomage Biotech made this reply: in the context of the slowdown of traffic dividends, the slowdown in growth at this stage is actually a strategic adjustment made by the company on its own initiative.
However, the "crisis" faced by Bloomage Biotech is far more than that. In recent years, in addition to functional skin care products, it has also expanded its business to functional foods, botulinum toxin, recombinant collagen and other tracks, trying to create another trump card after hyaluronic acid and functional skin care products, but the performance is unsatisfactory. What is clear is that this large company, which is in the middle of a huge wave, is also looking for other ferry crossings.
Bloomage Biotech's transformation path
To a certain extent, from the B-end to the C-end, every step of Bloomage Biotech has stepped on the tuyere.
This company first came out of the circle at the B end because the method of producing hyaluronic acid by microbial fermentation replaced the less advanced animal tissue extraction method in China. In this way, it not only achieved a leap in the production of hyaluronic acid, but also broke the situation that China mainly relied on imports. Bloomage Biotech has become the world's No. 1 hyaluronic acid manufacturer, with sales once accounting for half of the world's total, while B-end raw materials and terminal products account for more than 90% of the total revenue.
The turning point occurred around 2018, with the end of the supply-side dividend period of hyaluronic acid products, business growth peaked, and Bloomage Biotech's profits began to decline, and it had to find new growth points. Through a large number of surveys, it has been found that due to the abuse of unhealthy cosmetics, excessive sensitivity has become a major pain point for modern skin care consumers, and consumers also pay more attention to the ingredients and efficacy of products.
Based on this cognition, Bloomage Biotech launched the first hyaluronic acid disposable stock solution "Runbaiyan" in China for functional skin care inspired by disposable eye drops. "Aseptic filling" can effectively maintain the freshness and activity of the product, and the product is thrown away as soon as it is used up, avoiding multiple contamination and oxidation. This concept was recognized by consumers, and Runbaiyan soon became the first brand under Bloomage Biotech to enter the sales level of 1 billion.
As we all know, in the beauty industry, multi-brand strategy has become a prominent science, for example, L'Oréal, a beauty giant with dozens of brands, has products spanning skin care, makeup, perfume, hair care and other fields to meet the consumer needs of different people. Coincidentally, in addition to Runbaiyan, Bloomage Biotech has also successively launched the anti-aging skin care brand Quadi, BM Muscle Activator for oily skin, and Medrepair designed for sensitive skin. Among them, the sales of Runbaiyan and Quadi have successfully entered the 1 billion level, which has helped Bloomage Biotech to seize more market share to a certain extent.
According to statistics, Bloomage Biotech once laid out more than 10 sub-brands of skin care products, covering hyaluronic acid repair, sensitive skin, anti-aging and other product lines. Riding on the upsurge of traffic dividends and efficacious skin care, in the five years from 2018 to 2023, the revenue scale of Bloomage Biotech's skin care products has increased from 600 million yuan to 4.6 billion yuan, accounting for more than 72% of the revenue, becoming another revenue pillar after hyaluronic acid.
Hit a hard spot
From the perspective of the domestic skin care product market structure, international brands led by L'Oreal still occupy an absolute dominant position in the mid-to-high-end market, and the top three brands in terms of market share in 2023 are L'Oreal, Estee Lauder, and Shiseido, which occupy more than 28% of the market share. With the development of the beauty economy in recent years, skin care products will gradually become a necessity for Generation Z, which also makes more and more new players in China emerge in the skin care product track.
In last year's 618 and Double 11 consumption promotions, domestic brands such as Bethany performed well, and Proya topped the sales list of cosmetics on multiple platforms for the first time during the Double 11 period. It is worth noting that Bloomage Biotech has previously had a high degree of recognition in the hearts of consumers through the category of secondary essence, but with the successive launch of secondary essence with different effects by Fumei, Ou Shiman, and Jiaorunquan, it is no longer a new concept.
In 2022, Bloomage Biotech's marketing expenses will exceed 2.4 billion yuan, through cooperation with Wei Ya and other head celebrities, as well as promotion on platforms such as Xiaohongshu and Douyin, these large investments in marketing have indeed brought traffic dividends and brand awareness to Bloomage Biotech, and in 2019, Bloomage Biotech's dependence on Wei Ya once reached 40% of its revenue, and correspondingly, Bloomage Biotech's revenue increased by nearly 30%.
Interestingly, compared with many people's respect for Kefumei, Proya, HBN, including the now popular brands such as Guyu and Rare Collection, Bloomage Biotech does not have a "hot product" in the true sense. At present, most of consumers' brand awareness of Bloomage Biotech stays at the ingredient level, and the memory point does not lie in the product itself.
In addition, the continuous blood transfusion in marketing has not prevented Bloomage Biotech's "territory" from being continuously eroded by competitors, and in 2023, the revenue of Bloomage Biotech's four major skin care brands will decline year-on-year, among which BM muscle activity will decline the most year-on-year, as high as 2962%。Nowadays, traffic is becoming more and more expensive, and the profit margin of the brand side will be further reduced, and there are only two ways for enterprises to rely on over-reliance on marketing: either the headquarters will continue to burn money and blood transfusion in exchange for share; Either discount on ingredients and efficacy, reduce costs, and leave room for price reduction. Either way, it's not a long-term path.
It is worth noting that judging from the financial report, in 2022, Bloomage Biotech's R&D expense ratio on functional skin care products will be 68%。Compared to from 2246% increased to 47With a 95% sales expense ratio, the difference is not small. In the eyes of capital, this is not good news for a company that prides itself on biotechnology.
In horizontal comparison, the proportion of R&D investment of Bloomage Biotech is much lower than that of its peers such as Giant Biotech and Bethany. Its core patents have even been revealed to be obtained by purchasing, such as the "microbial fermentation method" mentioned at the beginning, and in the face of inquiries from the Shanghai Stock Exchange, Bloomage Biotech has admitted that it was acquired from other research institutes.
On the other hand, the functional similarity and substitutability of products are too high, and there will inevitably be competition between the products of brother brands. For example, Biohyalux and Quadi have launched hyaluronic acid stock products, the main ingredient of these products is hyaluronic acid, which has moisturizing and anti-wrinkle effects.
From the perspective of consumers, the skin care market is changing rapidly, and new trends will appear every once in a while, and they pay more attention to the actual efficacy of the product than the first. In the second half of 2023, Bloomage Biotech launched the "White Gauze Disposable 2."Products such as 0", "Rejuvenating Cream" and "Rejuvenating Essence Water" have further enriched the product matrix, but they have failed to make a splash in the market.
What is the future of Bloomage Biotech?
What kind of company is Bloomage Biotech? The founder, Zhao Yan, has publicly emphasized many times that "Bloomage Biotech is not a medical aesthetic company, but a biotechnology company." But for now, its skincare business still accounts for the majority of revenue.
In order to transform, Bloomage Biotech has also made many attempts in recent years. For example, when the botulinum toxin market was hot, she was committed to making it the second trump card after hyaluronic acid. To this end, Bloomage Biotech began to lay out in 2015 and signed a cooperation agreement with Medytox, the largest botulinum toxin company in South Korea. However, due to the latter's market irregularities and the possibility that its botulinum toxin sales license would be revoked, the cooperation between the two parties was forced to terminate. After vigorously laying out the business for several years, in the end, the bamboo basket was empty, and Bloomage Biotech also missed the best layout time for this outlet.
In recent years, Bloomage Biotech has looked for many new trump cards, such as recombinant collagen, and synthetic biology. But recombinant collagen was once considered an IQ tax. Even Zhao Yan said in public that the use of collagen in skin care products is a pseudo concept because it cannot be absorbed. With hair loss, people are gradually getting younger pain points. In 2017, Bloomage Biotech acquired Revitacare, a French professional anti-aging experiment, and soon began to lay out the scalp and hair professional track.
In 2022, Bloomage Biotech will elevate "synthetic biology" to the company's strategic level. In the view of Zhao Yan, chairman and general manager of Bloomage Biotech, synthetic biology is the most basic discipline leading to future science and technology, and it even surpasses chips in the dimension of global competition. In the decade from 2010 to 2020, the global financing scale of synthetic biology has grown rapidly from US$400 million to US$18 billion, with a compound annual growth rate of 46%. McKinsey Analysis**Between 2030 and 2040, the economic impact of synthetic biology will reach 18 trillion dollars to 36 trillion dollars.
This layout of Bloomage Biotech is obviously stepping on the tuyere, and it is indeed expected to become the next trump card after hyaluronic acid and functional skin care products. But it is still unknown whether it can fly, after all, the investment in synthetic biology is a long-term undertaking, and so far Bloomage Biotech has not yet produced products through synthetic biology technology.
In the eyes of the outside world, too many product lines are often easy to lose focus, and these attempts of Bloomage Biotech are either still in the embryonic stage, and at present, they will not bring a big revenue breakthrough in the short term, and even leave a big impression of being big but not sophisticated.