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this year is regarded as the "first year of change" for huaxizi bio, but everything does not seem to be going so smoothly and the challenges have just begun.

arts｜tan liping, reporter of "chinese entrepreneurs"

edit｜zhang hao

image source: visual china

huaxizi bio, once enjoying a halo, has bid farewell to the myth of growth.

recently, huaxi bio, the "first hyaluronic acid stock", disclosed its 2024 semi-annual report. the company achieved revenue of 2.811 billion yuan in the first half of the year, a year-on-year decrease of 8.61%; net profit of 341 million yuan, a year-on-year decrease of 19.51%; non-net profit of 316 million yuan, a year-on-year decrease of 12.38%.

2023 has already been called the "worst report card". the continued decline in performance has triggered a volatile decline in stock prices. as of the close of august 30, huaxi bio's stock price was 50.3 yuan per share, with a total market value of 24.228 billion, reaching a historical low.

at its peak, huaxi bio was the world's leading company in the field of hyaluronic acid (also known as hyaluronic acid), and was listed on the science and technology innovation board. riding on the east wind of the "appearance economy", its market value once exceeded 100 billion yuan. especially in the highlight of 2021,founder zhao yan also ranked among the top ten female entrepreneurs on the hurun list with a net worth of 56.5 billion yuan, and was called the "hyaluronic acid queen" by the outside world.

however, as the profit momentum of hyaluronic acid weakened, huaxi biopharma encountered growth difficulties. the former "growth engine" seemed to have pressed the pause button, and the second growth curve was still being explored, so the internal transformation was vigorously carried out.

however, the effect of the reform is not yet obvious, but the "pain" has already appeared. in the first half of this year, huaxi bio has experienced many personnel changes: the financial director changed, several core technical personnel left one after another, and the company's deputy general manager liu aihua is no longer directly responsible for research and development.

in june this year, zhi fanfan, a former member of the founding team of the quadi brand, also posted on social media that he was bullied in the workplace of his former company. in response, huaxi bio responded that "the former employees maliciously hyped up the resignation incident and publicly released competing brands in the same industry."

huaxi bio internally regards 2024 as the "first year of change", but for this "queen of hyaluronic acid", the challenges may have just begun.

step down from the altar

medium-length hair and low double ponytails are zhao yan's signature hairstyle. as the world's largest hyaluronic acid supplier, the story of bloomage biotechnology is inseparable from its founder zhao yan.

born in 1966, she graduated from east china normal university with a degree in biology and worked as an assistant teacher at her alma mater. in 1989, zhao yan and her colleagues resigned and started their own business. after making their first fortune in hainan, they established huaxi industrial company and successively engaged in clothing and real estate investment businesses.

in 2000, zhao yan learned that shandong fureada biochemical co., ltd., a hyaluronic acid manufacturer and the predecessor of huaxizi biology, was suffering from continuous losses due to poor management."one hyaluronic acid molecule can lock 1,000 water molecules." when people didn't understand the hyaluronic acid market at that time, she was inspired by researchers and thought, "many skin problems are caused by an imbalance of water and oil. if i can expand this product into the cosmetics field and use it on the skin, then the market will be huge."

she invested 12 million yuan to invest 50% of the equity of freda biochemical, becoming the largest shareholder. under zhao yan's leadership, this once loss-making company quickly turned around and became the world's largest hyaluronic acid raw material manufacturer in 2007.

before 2008, bloomage's main business was to b raw materials business. however, although this is the business that bloomage started with and the foundation, zhao yan does not want to be just a raw material supplier. "compared with the b-end, the market potential of the c-end, i.e. the consumer-end, is much greater."

in 2008, after huaxi bio was listed in hong kong, it used all the funds raised for the research and development, project establishment, clinical trials, and approval of c-end products. it also expanded into ophthalmology, orthopedics, and dermatology.

beijing, bloomage biopharmaceutical building.

in 2012, bloomage launched its terminal product, "modified sodium hyaluronate gel for runbaiyan injection". as the first cross-linked hyaluronic acid soft tissue filler in china to obtain legal approval, it fired the first shot in bloomage's transformation from a hyaluronic acid raw material manufacturer to a full-industry chain enterprise with hyaluronic acid as its core. in 2013 and 2014, bloomage's medical terminal products in the fields of ophthalmology and orthopedics also received marketing approval one after another.

as a result, huaxi biopharma ushered in its first growth, and its revenue increased year by year from 2013 to 2015.

in addition to being a supplier of raw materials, there is another reason that has not been mentioned.the gradual overcapacity of hyaluronic acid raw materials has led to a decline in the purchase price.huaxizi bio's raw material business revenue is also facing a growth slump.

around 2017, bloomage biotechnology continued to move into the c-end consumer market and expanded the application areas of hyaluronic acid, including functional skin care, functional food, etc. thanks to the rise of e-commerce and social media such as taobao live and xiaohongshu, bloomage biotechnology's marketing and promotion on the brand side has enabled the company's functional skin care products to develop rapidly, forming several major skin care brands including runbaiyan, quadi, mibeier, and bm jihuo. among them, the revenue scale of runbaiyan and quadi has already broken into the billion yuan scale.

this business soon supported half of the company's revenue.in 2022, functional skin care products sold 4.607 billion yuan, accounting for 72.45% of revenue at one point.

in 2019, huaxi bio was listed on the shanghai stock exchange, and its stock price soared on the day of listing. riding on the hyaluronic acid trend, it rose to a maximum of 314.99 yuan per share in july 2021, with a market value of over 140 billion yuan.

however, due to the decline of functional skin care products, the main business of huaxi biotechnology, which used to generate revenue and growth, the company is no longer at its peak.in the first half of this year, huaxizi bio's functional skin care products achieved revenue of 1.381 billion yuan, a decrease of 29.74%, and the proportion of total revenue dropped to 49.29%.

in this regard, huaxi bio explained that the business is still in the deep waters of management reform, and the main focus is on adjusting the team, sorting out the internal affairs, reviewing strategies, and correcting actions. the operating measures have been tightened, the market expansion has not been fully launched, and the operating results will inevitably be affected in the short term.

the general background is that with the rapid development of the medical beauty industry, more and more companies are pouring into the market. among them, there is no shortage of companies with new ingredients, new methods and new forces, which are constantly driving the intensification of market competition, resulting in the disappearance of the moat of traditional "medical beauty giants".

functional skin care products for the c-end often require a lot of money for publicity. in order to retain customers, huaxi bio's sales expenses have remained high in recent years. from 2019 to 2022, huaxi bio's sales expenses expanded from 521 million yuan to 3.049 billion yuan. in 2023, it dropped slightly to 2.842 billion yuan. it was not until the first half of 2024 that huaxi bio's sales expenses were under certain control, down 17.02% year-on-year, but still as high as 1.179 billion yuan.

regarding the pressure on overall operating performance, huaxi bio said frankly,"from a longer-term perspective, this management change is a strategic and proactive adjustment after the company's long-term sustained growth. it is the only way to transform and upgrade from high-speed growth to high-quality growth."

innovation and exploration

in recent years, the development theme of huaxi bio has become "synthetic biology."

in the financial report, bloomage bio positioned itself as a biotechnology company driven by synthetic biotechnology innovation and a full-industry chain platform company for biomaterials. one of the six r&d platforms it has built is a synthetic biology r&d platform. it also stated that it has established a full-industry chain business system for bioactive materials from raw materials to medical terminal products, functional skin care products, and functional foods, serving global manufacturers, medical institutions, and end users in the fields of medicine, cosmetics, and food.

synthetic biology is believed to have the ability to "create everything". industry insiders say that it can achieve the de novo design and optimization of biological processes to create biological systems and organisms with specific functions. obviously, huaxi bio also wants to take advantage of this trend to expand its raw material ingredient portfolio.

according to the company, huaxizi biotechnology has started to develop synthetic biology since 2018. in 2022, huaxizi biotechnology's "international innovation industrial base for synthetic biotechnology" was established in daxing, beijing and put into use. in 2023, it launched a number of bioactive raw materials such as recombinant human collagen.

in fact, this is not the first time that huaxi bio has made new attempts and explorations in its business.

in 2015, bloomage began to develop botulinum toxin and signed a joint venture agreement with medytox, a korean botulinum toxin company, to exclusively develop, expand and sell the product in mainland china. however, as medytox was exposed for illegal acts such as material fraud, bloomage announced the termination of cooperation in 2023. after 8 years, its dream of a botulinum toxin business was shattered.

after that, "collagen" became a high-frequency word for bloomage biotechnology to speak to the outside world. in april 2022, bloomage biotechnology acquired a 51% stake in beijing yierkang for rmb 233 million, becoming its controlling shareholder and officially entering the collagen industry. in august 2022, bloomage biotechnology released collagen products, mainly including animal-derived collagen, recombinant human collagen, and hydrolyzed collagen (peptides), which can meet the needs of different fields such as medical care, food, and regenerative medicine.

for a period of time in 2022, huaxi bio did not hide its "ambition" in collagen, emphasizing that it would regard this product as the second largest strategic bioactive substance after hyaluronic acid. however, zhao yan said at a media communication meeting in 2023 that she was cautious about collagen and that it was only a "supplement" in skin care products. "collagen has a relatively large molecular weight and becomes peptides and amino acids when eaten. in order to ensure the true effect of collagen, it should be used in medical devices."

at that time, some people speculated that huaxi bio's change in attitude towards collagen might be due to the smooth development of this business.

in addition, in 2021, huaxi bio also launched the first hyaluronic acid drinking water in china, "shuijiquan", and launched similar new categories. however, there has been no consensus on the efficacy of drinking hyaluronic acid directly in the market, and there are different opinions.

therefore, the market is still waiting for its next hit ingredient besides hyaluronic acid.

reference: "dialogue with zhao yan: people should follow the situation, and following money will lead to a wrong path" new fortune

"two listings, successively encountered the financial crisis and the covid-19 pandemic, the founder said: the best crisis defense weapon is..." china entrepreneur magazine

"net profit drops by 40%! how does the "queen of hyaluronic acid" tell the "new story" of huaxi biotechnology?" economic herald