Haohai Biological Industry's performance growth stalls: Ophthalmology and Orthopedics businesses cool down under centralized procurement, hyaluronic acid business growth significantly slows down

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Under the combined pressure of tightened policy oversight, soft consumer demand, and the fading of industry tailwinds, China’s medical aesthetics (cosmetic medicine) sector is going through a deep adjustment cycle. In 2024, for Haohai Biological (one of the “three musketeers” of hyaluronic acid), it was a year full of challenges. According to the annual report data, the company’s full-year operating revenue was RMB 2.7B, up only 1.64% year over year, which is historically higher than only the 2020 period impacted by the COVID-19 pandemic; net profit was RMB 420 million, up just 1.04% year over year.

From a single-quarter perspective, the company’s performance in the fourth quarter faced comprehensive pressure. Operating revenue for the period was RMB 623 million, down 7.3% year over year; net profit attributable to shareholders was RMB 79.56 million, down 10.9% year over year; and non-recurring net profit attributable to shareholders was RMB 57.68 million, down 26.8% year over year. Behind this near-stagnant set of results, multiple pressures are reflected, including the fading of industry tailwinds in medical aesthetics, the impact of centralized procurement policies, and intensifying market competition.

By business segment, due to centralized procurement, in 2024 Haohai Biological’s ophthalmology business revenue was RMB 858 million, down 7.60% year over year. As the second-largest domestic supplier of artificial intraocular lenses, Haohai Biological’s five lens brands were selected in the national centralized procurement in mid-November 2023. Although the sales volume of mid-tier preloaded products grew by 137%, and high-end dual-focus products grew by 40%, the selected bid price fell by more than 50% compared with before centralized procurement, directly leading to a 14.06% decline in revenue.

Orthopedics is also mired in policy turmoil. In 2024, after the provincial centralized procurement for sodium hyaluronate injection in places such as Zhejiang took effect, Haohai Biological’s revenue from anti-adhesion materials fell by 4.77%, and revenue from medical hyaluronate sodium gel decreased by 4.35%. Although the company claims that “multiple mid-to-high-end product R&D is progressing in an orderly manner,” the technology barriers in orthopedics are relatively low. Under the “encirclement” from competitors such as Weigao Group and Chunli Medical, Haohai Biological’s advantages are hard to speak of.

The deeper impact is that centralized procurement policies are reshaping the industry ecosystem. Taking centralized procurement of artificial joints as an example, the average bid price drop reached 82%, forcing companies to use volume to offset price. If Haohai Biological cannot break through in material innovation or surgical solutions, its orthopedics segment may also weigh on growth as it matures.

Against the backdrop of pressure in both the ophthalmology segment and orthopedics business, the medical aesthetics business has performed relatively well, becoming “the hope of the whole village.” In 2024, Haohai Biological’s medical aesthetics segment achieved revenue of RMB 1.2B, up 13.08% year over year. Its share of total revenue further increased to 44.38%, completing a remarkable turnaround from a share of under 20% in 2020, while maintaining its position as the company’s largest business.

Among them, hyaluronic acid products contributed RMB 742 million, accounting for as much as 62.05%, up 23.23% year over year. However, it is also important to note that behind the impressive figures, there are many hidden concerns. In terms of growth rate, in 2023 the company’s hyaluronic acid product revenue was RMB 602 million, up 95.54%. By comparison, in 2024 revenue still maintained growth in double digits year over year, but the growth rate has clearly slowed.

From a market perspective, hyaluronic acid used to be the “golden track” in the medical aesthetics industry, but it has now fallen into serious “cutthroat competition.” As of 2024, more than 50 Class III medical device certificates for domestically approved hyaluronic acid products had been obtained, and there were over 400 circulating brands. Even in the high-end market, it is not a blue ocean. International giants such as AbbVie’s “Juvéderm” and Sweden’s Sinclair? “Restylane” firmly occupy the price band above RMB 8,000, while domestic companies such as AimeiKe and HuaXi Biology are also accelerating their high-end expansion plans.

The more severe threat comes from the rise of substitutes. In recent years, issues such as “puffy-fied faces” caused by overfilling with hyaluronic acid have frequently drawn consumer complaints, and hydroxyapatite (commonly known as “the girl’s needle”), which stimulates collagen regeneration, has gradually become a new favorite in the industry. According to a forecast by Frost & Sullivan, by 2027 the size of China’s collagen market will reach RMB 173.8 billion, with the share of reconstituted collagen exceeding 60%.

Although Haohai Biological has already laid out intelligent cross-linked collagen products, its R&D progress lags behind pioneers such as Jinbo Bio. Whether it can catch up and overtake remains an unknown. In addition, the collagen segment has also shown signs of overheating. As of the end of 2024, the NMPA had received applications for 17 Class III certificate applications for reconstituted collagen, and hidden concerns about a price war have begun to surface.

Besides hyaluronic acid, the other pillar in the company’s medical aesthetics segment—radiofrequency and laser equipment—has also performed mediocrely, suffering a setback due to policy adjustments. In March 2022, the National Medical Products Administration upgraded the regulatory category for radiofrequency treatment devices from Class II to Class III, requiring that from April 1, 2024, products that had not obtained a medical device registration certificate may not be produced, imported, or sold.

This policy may directly affect the company’s globalization strategy. Haohai Biological’s radiofrequency beauty equipment in Israel, via its subsidiary EndyMed, originally saw rapid growth in the China market. But after the regulatory threshold was raised, its products needed to reapply for Class III certificates, causing market promotion to stall. At the same time, overseas markets also face mounting pressure from tightening regulations in Europe and the U.S. With pressures from both inside and outside, there is unlikely to be any clear sign of recovery for the radiofrequency equipment segment in the short term. Although the policy buffer period extends to 2026, revenue from related businesses in 2024 still declined 6.97% year over year.

Looking ahead, amid ongoing squeeze from centralized procurement policies, accelerating fading of medical aesthetics tailwinds, weak growth in traditional businesses, and increasingly intense industry competition, hyaluronic acid business may also struggle to stand on its own. When the industry shifts from the “easy win era” to the “hard-fight mode,” whether Haohai Biological can solidify its leading position still needs to be proven over time.

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