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{调取该文章的TAG关键词}|The Hyaluronan Market, A New Found Gold Mine in China( 二 )


Even though China is the biggest hyaluronan producer in the world, the hyaluronan injection market in the country is still dominated by foreign brands, especially in the mid and high-end market. To put it into perspective, China accounted for 81% of the sales volume of hyaluronan in 2019. Bloomge BioTechnology is also the biggest supplier of hyaluronan across the globe, holding nearly half of the global market share.
In 2019, LG, Allergan, Humedix, and Q-Med accounted for 24.2%, 18.6%, 14.3%, and 10.9% of the sales volume, statistics from Frost & Sullivan show. This also confirms that imported hyaluronan products are generally more expensive than Chinese ones.
In addition, foreign brands were able to acquire a registered license in China faster than domestic companies. Q-MedAB for instance was able to receive its medical device registration certificate for its hyaluronan product in 2008, the first in the country. In contrast, Imeik Technology and Bloomage BioTechnology only got their CDFA certificate in 2009 and 2012 respectively.
In addition to the late entry into the market, Chinese brands also failed to compete with their foreign counterparts when appealing to consumers even with lower pricing. 
In conclusion, despite the fact that domestic brands have provided more products of different price points for consumers to choose from, the Chinese hyaluronan market is still heavily influenced by foreign brands. When imported hyaluronan products are consumers' top choice, it is natural for the public to perceive hyaluronan injections as luxurious.
Where does the profit margin come from?There are three major players in the hyaluronan industry in China: Bloomage BioTechnology, Imeik Technology, and Haohai Biological Technology.
These top three players dominate the upstream of the industry, which allows them to maximize their profit margin. Upstream companies in this industry are generally material and equipment suppliers while the mid-stream companies are service providers such as medical cosmetology departments and dermatology departments of hospitals and clinics, as well as private cosmetic service providers. Downstream companies, on the other hand, focus on providing platforms for customer acquisition, such as Internet platforms like So-Young and social media platforms like Xiaohongshu. 
Upstream companies can gain the most profit but have less flexibility in increasing the profit margin. In comparison, although mid and downstream companies do not gain the most profit, they contribute more to generating added value for the industry. 
According to Essence Securities, the profit margin for raw material providers in the hyaluronan industry can be up to 85%-95%. The firm's statistics show that consumers pay on hyaluronan at the price of RMB¥857 per ml while the raw material cost is RMB¥30 per ml. Upstream businesses will bring up the price by RMB¥270. Distributors and cosmetics service providers will then add up the price by RMB¥557, RMB¥85 of which will be given to the doctor and RMB¥342 will be the cost for marketing and customer acquisition. 
It is not easy for mid and downstream companies to make money out of hyaluronan. The profit margin for distributors is between 12% and 25%, while the number for cosmetic medicine service providers is between 50% and 70%, Guoyuan Securities' data show. However, there is a total number of over 13,000 cosmetic medicine service providers in China, which creates an extremely competitive market where the customer acquisition cost remains sky-high. The fierce competition has reduced their profit margin and made many small firms unable to achieve break-even.
Upstream companies have natural advantages in maintaining their profit margin in the industry because of the technological and qualification barriers. These barriers also make it difficult for distributors and service providers to find a replacement. Even if they find a replacement, the cost to transition is often very high.
Technological and qualification barriers are difficult to overcome. The top three players in the Chinese market have first-mover advantages. Even if an emerging company can develop new technology, it will still take the company three to five years to complete product R&D, clinical trials and get its products examined by the authority. Imeik Technology was able to secure its status in the market because of its success in getting the level three medical equipment certificate for its product Hearty. Bloomage BioTechnology, on the other hand, had to undergo 16 years of efforts to get the relevant permit from the authority to enter the hyaluronan food market. To date, there are only six companies in China that have received a qualification certificate from the authority.

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