Aimer is one of the "three giants" in the field of hyaluronic acid, and before crossing the thousand-dollar mark, it delivered its first annual report, and the gross profit margin of its main products was more than 92%, which is comparable to that of Guizhou Moutai's gross profit margin of 93.78% (2019), and thus it is known as "the woman's Maotai". ".
Aimer mainly sells solution-based injectables and gel-based injectables, and the main ingredient is hyaluronic acid, a polysaccharide that can make the skin soft, smooth and wrinkle-free. However, Amec itself does not produce hyaluronic acid raw materials, and its prospectus shows that the company's suppliers of hyaluronic acid raw materials from 2017 to 2019 will be Shanghai Avet, Huaxi Bio (688363.SH) and Zhongshan Bio.
Huaxi Bio is another leading company in the field of hyaluronic acid, starting in Jinan, Shandong Province, and currently has layouts in both the upstream and downstream of hyaluronic acid. The production base of Zhongshan Bio is in Rizhao, Shandong Province.
It's not a coincidence that Amicus was chosen because Shandong, China, is the source of 70% of the world's hyaluronic acid raw materials. The "China Hyaluronic Acid Industry Market Research Report" released by consulting firm Frost & Sullivan in April 2019 shows that China's total sales of hyaluronic acid raw materials in 2018 have accounted for 86% of the world's total sales, and the world's top five suppliers - Huaxi Bio, Focus Bio, Fufeng Bio, Dongchen Bio, Anhua Bio All from Shandong.
Prior to this, hyaluronic acid raw materials are mostly produced in Japan, the Czech Republic and other countries. Sullivan's report shows that by 2018, Japan and the Czech Republic together provided only 8% of the world's hyaluronic acid raw materials.
How did Shandong master this industrial code?
The Shandong Academy of Pharmaceutical Sciences was founded in 1983, and the two scientists who made the breakthrough in hyaluronic acid research - Guo Xueping and Ling Peixue - worked here at the same time. (Southern Weekend reporter Feng Congying / photo)
Huaxi Bio is located in Jinan's high-tech development zone, with factory and office buildings occupying about 80 acres of land. On the adjacent road is the Shandong Academy of Pharmaceutical Sciences.
It is these two companies and organizations right next to each other that pioneered the hyaluronic acid industry in China.
Shandong Academy of Pharmaceutical Sciences was founded in 1983, formerly known as Shandong Institute of Commercial Science and Technology, and the two scientists who made breakthroughs in the field of hyaluronic acid research - Guo Xueping and Ling Peixue - worked here at the same time.
According to the Chinese Journal of Biochemical Drugs, in 1983, Ling Peixue got a master's degree in biochemical pharmacy from Shandong Medical University (now Shandong University) and studied under Tianmin Zhang, one of the founders of biochemical pharmaceuticals in China. After graduation, Ling Peixue entered the Shandong Academy of Pharmaceutical Sciences and began researching hyaluronic acid. The following year, another student of Zhang Tianmin's, Guo Xueping, graduated and joined the research of hyaluronic acid.
According to the magazine, Zhang Tianmin helped Ling Peixue to develop hyaluronic acid as a biochemical drug after he retired in 1993, and in 2002, Zhang Tianmin wrote an article in the journal Food and Drugs, saying that Ling Peixue and others pioneered the industrial production of hyaluronic acid by bio-fermentation method in China in 1992.
Hyaluronic acid was discovered in 1934, when Carl Meyer, a professor of ophthalmology at Columbia University, extracted a polysaccharide from the vitreous humor of a cow's eye in an experiment, naming it Hyaluronicacid. In the National Pharmacopoeia, it is called hyaluronic acid. The name hyaluronic acid comes from a mistranslation by a Taiwanese scholar.
Professor Zhao Zhenmin, director of the Department of Plastic Surgery at Peking University Third Hospital and secretary-general of the Chinese Society of Plastic and Reconstructive Aesthetics, told Southern Weekend that hyaluronic acid exists in skin, joints, and other tissues, and usually exists in the form of sodium salts, and that the hyaluronic acid molecule is able to carry more than 500 times the amount of water, making it one of the best-recognized moisturizing ingredients.
Before the emergence of domestic microbial fermentation method, hyaluronic acid collection with the above-mentioned animal tissue extraction method, usually from the cow's eye, chicken crown extraction, there is a high cost, low efficiency, poor quality.
Huaxi biological relevant person in charge of the South Weekend reporter introduced to the 1970s, the period of animal tissue extraction method, a kilogram of hyaluronic acid needs to be extracted from more than 200 kilograms of chicken crowns, the price of medical-grade hyaluronic acid is as high as 100 U.S. dollars per gram. "Because it was extremely expensive, hyaluronic acid would be used in rich people's horse racing at that time, and before the racehorse went on the track, people shot hyaluronic acid into the horse's knee."
The emergence of microbial fermentation has boosted the industrialization and scale of hyaluronic acid. According to Huaxi Bio, the price of cosmetic-grade hyaluronic acid has now dropped to between a few thousand dollars and tens of thousands of dollars per kilogram.
The microbial fermentation method was later incorporated into the project entitled "research and development of sodium hyaluronate and its pharmaceutical preparations", and won the second prize of the National Science and Technology Progress. The Ministry of Science and Technology announced the 2004 National Science and Technology Progress Award catalog shows that the project's main completors and units: Ling Peixue, He Yanli, Guo Xueping, Wang Chunxi, Qian Xue, Shandong Academy of Pharmaceutical Sciences, Shandong Zhengda Forida Pharmaceuticals Ltd, Shandong Forida Biochemicals Co.
Among them, Forida biochemical company for Huaxi biological predecessor. Huaxi biological prospectus shows that on November 12, 1999, Shandong Province Biochemical Drugs Company (now Forida Group, the only shareholder of the initial Shandong Academy of Pharmaceutical Sciences), Shandong Zhengda Forida Pharmaceutical Company Limited (hereinafter referred to as Zhengda Forida), Shandong Zhengda Technology Company Limited (hereinafter referred to as Zhengda Technology) and the United States of America Forida agreement to set up a biochemical Forida with a capital of RMB 750,000 yuan.
The person in charge of Huaxi Biotechnology, Forida biochemical was established at the beginning of the management and other issues into a loss-making state, and began to look for foreign investment. At that time, the general manager of Forida Group, Ling Peixue in the Peking University International MBA study, and recognize the chairman of today's Huaxi biological Zhao Yan.
At that time, Zhao Yan was already a wealthy businessman, who had accumulated wealth in the garment industry, real estate and other fields. The Huaxia Bank Building, Huaxi International Center, SK Tower, and Huaxi LIVE - Wukesong, all of which stand on Beijing's Chang'an Street, are all of Zhao Yan's investments.
Zhao Yan, who studied biology as an undergraduate, perceived the potential of hyaluronic acid's water-locking function applied to skincare and other fields, and acquired a 50% stake in Forida Biochemistry in 2000 for 12 million yuan.
In May 2019, Huaxi Bio disclosed in response to the second round of questions from the SSE that when Zhengda Technology was founded in 1999, *** there were 13 natural person shareholders including Zhang Tianmin. Prospectus shows that on August 9, 2000, Zhengda Forida will hold 750,000 shares of the issuer transferred to Zhengda Technology. Eye of the sky check shows that is up to technology by Zhao Yan actual holding, has been canceled. This means that when Zhao Yan is from the Zhengda Technology and Zhengda Forida two companies acquired Forida biochemical equity.
Why Ling Peixue did not hold shares? Southern Weekend reporter had contacted Ling Peixue through an intermediary, Ling Peixue to short-term work is too busy for the reason politely declined an interview.
When the award was won, the technology was actually owned by Freeda Biochemicals. According to the Huaxi biological prospectus, in May 2001, Forida biochemical 450,000 yuan to the Shandong Provincial Academy of Pharmaceutical Sciences to buy out the fermentation method for the production of medicinal hyaluronic acid initial technology.
Later, Zhao Yan through the Huaxi Xinyu Investment Company Limited (hereinafter referred to as Huaxi Xinyu) continued to increase the holdings of Forida Biochemical, in June 2012, Forida Biochemical renamed Huaxi Forida. And after several complex changes in equity, to the end of December 2017, Forida Group completely withdrew from the shareholders. 2019, Forida Biochemical Company renamed Huaxi Biological, Huaxi Xinyu 65.86% of the shares.
In the 1980s and 1990s, other universities and research institutes in China were also promoting hyaluronic acid research.
One of the raw material suppliers of Amicus, Zongshan Bio, was founded in 2005, and its core technology comes from cooperative research and development with Jiangnan University. Jiangnan University is located in Wuxi, Jiangsu Province, on the shores of Taihu Lake.
Zhang Jianyong, general manager of Zhongshan Bio, told a reporter from Southern Weekend that the technical barriers to producing low-end hyaluronic acid have basically been broken, and that the technology is actually not complicated, and the key lies in finding the right strains of bacteria, and that the difference between the various companies lies in their quality.
Zhang Jianyong recalled that between 2000 and 2010, there are enterprises in Jiangsu and Zhejiang to produce hyaluronic acid, just in the scale and Shandong enterprises can not match. For example, Changzhou Institute of Pharmaceutical Research Co., Ltd. in Changzhou, Jiangsu Province, its predecessor is a research institute founded in 1984, from raw materials to preparations are involved.
But Shandong enterprises, because of the earliest start into the field of hyaluronic acid, soon formed an industrial cluster.
Founded in 2010, Shandong Anhua Biomedical Co Ltd (hereinafter referred to as Anhua Bio) accounted for 7% of global sales of hyaluronic acid raw materials in 2018. Located in Binzhou City, Shandong Province, Anhua Bio's annual production scale has now reached more than 100 tons.
On June 8, 2015, Anhua Bio was listed on the New Third Board.
Anhua Bio has quite a history with Huaxi Bio in the middle of its development. The financial report shows that the real controller of Anhua Biologicals, Han Xiuyun, since 1991, after graduating from Shandong Normal University, in September 1998 to December 2003, working in Huaxi Forida, served as manager of the technical department, sales manager.
In addition to the driving effect of Huaxi biology, Shandong's own advantages can not be ignored.
"After fermentation, inactivation, purification, precipitation with organic solvents and drying, etc., these steps are similar to the process of pharmaceuticals." Zhang Jianyong said that the large number of pharmaceutical companies in Shandong Province is one of the reasons why Shandong Province was able to quickly give birth to a host of hyaluronic acid raw material companies. Zhang Jianyong joined Zongshan Bio in 2008, and before that he worked in the pharmaceutical industry as a technical consultant.
According to the Popular Daily, the scale of Shandong Province's pharmaceutical industry accounted for one-seventh of the country in 2019, and Qilu Pharmaceutical and 13 other companies entered the top 100 national pharmaceutical companies, the first number in the country.
Zhang Jianyong believes that Shandong Province, as a large agricultural province, also provides a stable supply of raw materials for the production of hyaluronic acid. The person in charge of Huaxi Bio also said that hyaluronic acid and Maotai fermentation of the raw materials used are similar. Under the microbial fermentation method, the raw materials of the fermentation medium are mainly peptone, yeast powder, glucose and ethanol, and the latter's raw materials are wheat, sorghum, barley and so on.
The latest data from the Shandong Provincial Bureau of Statistics shows that in 2020, the total output value of Shandong's agriculture, forestry, animal husbandry and fishery industry exceeded 1 trillion yuan for the first time, making it the first province in the country to have an agricultural output value of more than one trillion yuan.
China's total sales of hyaluronic acid raw materials in 2018 have accounted for 86% of the world's total sales, and the world's top five suppliers, such as Huaxi Biologicals, all come from Shandong. (Southern Weekend reporter Feng Congying / photo)
According to several interviewees, hyaluronic acid raw materials can be categorized into food-grade, cosmetic-grade, and pharmaceutical-grade in terms of usage. In order of technical difficulty and quality demand, food grade and cosmetic grade are at the low end, and pharmaceutical grade is the highest.
The technical difficulty also corresponds to the high and low gross margins. In recent years, the gross margins of food-grade and cosmetic-grade raw materials have been decreasing.
"There is a bottom line in cost, and market prices are gradually approaching the bottom line, and if this continues, we can only profit from volume." Zhang Jianyong said, low-end hyaluronic acid raw materials market competition has become a competition for capacity and price, even if only 10% or 20% gross margin, some companies are willing to rush up.
But when competing with foreign companies, low cost and large capacity are the advantages of domestic companies.
A number of interviewees explained that in the 1980s, the Japanese company Shiseido has mastered the microbial fermentation method. Huaxi bio-relevant person in charge recalled that in 2005, Shiseido came to visit the company, found that Huaxi biology through technology to greatly reduce production costs, back to China, they withdrew from the food-grade and cosmetic-grade raw materials market.
As for the pharmaceutical-grade raw materials market, due to the two thresholds across the technology and regulation, is still maintaining a high gross margin. According to interviewees, the price per kilogram of pharmaceutical-grade raw materials is between 100,000 yuan and 500,000 yuan.
Taking the raw materials applied to medical cosmetic surgery as an example, Zhao Zhenmin told the Southern Weekend reporter that there are two ways to clinically apply hyaluronic acid micropigmentation. One is a small molecule hyaluronic acid liquid injected into the dermis, which is often referred to as the clinical "water light needle". The other is hyaluronic acid gel injection filling and shaping, adding cross-linking agent after the hyaluronic acid into the gel, with filling and shaping to improve the effect of the surface contour shape of the body, but also prolong the absorption time of hyaluronic acid.
Quan Yuzhu told the Southern Weekend reporter, to realize the above two ways, involving the application of enzyme digestion and crosslinking technology. Quan Yuzhu is the founder of the injection beauty center of the first "three A" plastic surgery hospital in China, and the former director of the injection center of the Plastic Surgery Hospital of the Chinese Academy of Medical Sciences.
Taking the enzymatic method as an example, different hyaluronic acid end-products have differentiated requirements for the molecular weight of hyaluronic acid. In the past, the method of controlling the molecular weight of hyaluronic acid for the use of chemical methods such as acid and alkali, there are problems such as damage to the molecular structure of hyaluronic acid and impurities.
According to Huaxi Bio, in 2011, Guo Xueping realized the enzyme digestion method for the first time in the world to produce low molecular weight and oligomeric hyaluronic acid on a large scale. The enzymatic method does not have the disadvantages of the traditional chemical method, and shortens the degradation cycle from the original 12-15 days to 5-6 hours.
When the technical difficulties will be solved, it depends on the company's own R&D capability. The threshold of access set by the regulator will test the patience of enterprises.
At present, the sale of pharmaceutical-grade hyaluronic acid raw materials in China needs to be certified by the State Drug Administration, and this certification process takes as short as 2-3 years, and as long as more than 5 years. 2019, Zhongshan Biological obtained the certification. Until then, Zhongshan Bio's pharmaceutical-grade raw materials can only be exported, and in order to maintain its business, Zhongshan Bio specializes in cosmetic-grade and food-grade raw materials.
In June 2020, Zhongshan Bio decided to remodel the old plant and build a new hyaluronic acid production line, mainly to expand the production capacity of pharmaceutical-grade raw materials.
In early March 2021, a Southern Weekend reporter saw a lead anchor recommending Huaxi Bio's end products in front of the camera in the newly built second factory of Huaxi Bio.
In the face of declining raw material gross margins, Huaxi Bio has another way to cope - expanding the downstream terminal market, i.e., selling products that can be used directly by the general public, such as those applied to the face.
The financial reports of a number of listed companies show that the terminal products in the field of medical plastic surgery can achieve the highest gross margin, the most typical is the main business terminal products of the love of beauty. Huaxi biological annual report shows that between 2016 and 2019, the company's raw material products have the highest comprehensive gross profit margin of 76.16%, while the medical terminal products have the highest comprehensive gross profit margin of 86.67%, a difference of about 10 percentage points.
"After opening the C-end market, it can feed the B-end market of raw materials." Huaxi biological relevant person in charge said.
Why is the gross margin of injectable hyaluronic acid so high?
The relevant person in charge of Hao Hai Biotechnology (688366.SH) explained to the Southern Weekend reporter that hyaluronic acid for injection belongs to Class III medical device products with a certain technical content, with a high technological threshold, a long research and development time, a long time for approval, and a natural scarcity, and the cost of medical cosmetic material manufacturers is high in the early investment.
Haohai Shengke is one of the three listed companies in the field of hyaluronic acid, mainly engaged in orthopedics, ophthalmology surgical end products, and in recent years also entered the field of medical beauty.
Quan Yuzhu agrees with this view. He believes that the so-called "high gross margin" is suspected of speculation, in the discussion of costs, should not ignore the early investment in research and development.
However, imported hyaluronic acid brands still dominate the medical beauty market. Frost & Sullivan's report shows that in the competitive landscape of China's medical aesthetic hyaluronic acid products market in 2018, the top three companies by volume share were South Korea's LG (23.3%), Haohai Sangke (18.4%) and Sweden's Q-Med (13.0%).
According to Quan Yuzhu, the effect of hyaluronic acid molding is good or bad, and the crosslinking technology is closely related. In the early days, some companies in order to extend the time of hyaluronic acid in the body, crosslinking technology is not pass, affecting the stability of the tissue, which can lead to redness, swelling, allergies and other problems. There is still a gap between the cross-linking technology of domestic enterprises and the advanced level of foreign countries.
Haohai Biotechnology, Huaxi Bio and Aimer have been criticized for their low investment in research and development.
For example, from 2016 to 2019, Huaxi Bio's expensed R&D investment was 0.24 billion yuan, 0.26 billion yuan, 0.53 billion yuan, 0.94 billion yuan, respectively, accounting for 3.27%, 3.14%, 4.19%, 4.98% of revenue, which is less than 5%.
"From the perspective of financial data, R&D investment mainly refers to direct inputs such as R&D material costs and R&D staff salaries, non-financial caliber inputs are not counted, such as R&D inputs related to process improvement and equipment optimization. In addition, biotechnology in the continuous iteration, not every progress from 0 to 1 to invest in the construction, so the outside world on the Huaxi biological R & D costs evaluation is one-sided, the company more than twenty years have been continuously invested." Huaxi biological relevant person in charge explained.
When the Southern Weekend reporter asked about the true proportion of R & D investment, it said it was inconvenient to disclose the confidentiality.
Another blue ocean in the downstream market is oral hyaluronic acid.
Sodium hyaluronate was approved as a new resource food in 2008, and its scope of use is health food raw materials.
In January 2021, the National Health Commission issued an announcement that sodium hyaluronate will be expanded to milk and dairy products, beverages, alcohol, cocoa products, chocolate and chocolate products (including cocoa butter chocolate and products) and confectionery, and frozen beverages.
Huaxi biological responsible person said, the company since 2004 on the start of hyaluronic acid as a food additive to the declaration, Hunan Provincial Center for Disease Control and Prevention of hyaluronic acid raw materials produced by the food test shows that hyaluronic acid can increase the skin moisture, and antioxidant effect.
Prior to this, Huaxi Biological has been ready to expand production capacity. 2020 June 5, Huaxi Biological from the bankruptcy of the Dongchen Group bought Dongying Foset Bioengineering Company Limited (i.e., Dongchen Biological), the transaction price of 290 million yuan. Forsyth's production of hyaluronic acid raw materials to food grade, was acquired when the annual production capacity of hyaluronic acid 100 tons.
However, the effectiveness of oral hyaluronic acid is still facing questions.
"There is not much experimental data to prove how much can be retained after digestion and what is the efficacy." Liu Shaowei, a professor at the School of Bioengineering at the East China University of Science and Technology, explained to the Southern Weekend reporter that a product that meets food safety regulations is safe for the human body to take it, but that doesn't mean it's effective.
Zhao Zhenmin also said that the mechanism of the action of food containing hyaluronic acid on skin beauty after the action of various digestive enzymes in the gastrointestinal tract is still unclear, and that "it is not yet possible to overly mythologize or infinitely exaggerate the effect of oral hyaluronic acid on skin beauty."