Haohai Biotech's performance growth stalls: ophthalmology and orthopedics businesses cool down under centralized procurement, with hyaluronic acid business growth significantly slowing down

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In the face of tightening policy regulation, sluggish consumption, and fading industry dividends, China’s aesthetic medicine industry is undergoing a deep adjustment cycle. For 2024, Haohai Shengke, one of the “Hyaluronic Acid Three Musketeers,” faces a challenging year. Annual report data shows the company achieved total revenue of 2.698 billion yuan, a slight increase of 1.64% year-over-year, only higher than the impact COVID-19 had on 2020; net profit was 420 million yuan, up just 1.04% year-over-year.

Looking at quarterly data, the company’s Q4 performance was under pressure across the board. Revenue for the quarter was 623 million yuan, down 7.3%; net profit attributable to shareholders was 79.56 million yuan, down 10.9%; non-recurring net profit was 57.68 million yuan, down 26.8%. Behind this nearly stagnant performance lies the fading of industry dividends, the impact of centralized procurement policies, and intensified market competition.

Segment-wise, affected by centralized procurement, Haohai Shengke’s ophthalmology business revenue in 2024 was 858 million yuan, down 7.60% year-over-year. As the second-largest domestic supplier of artificial lenses, Haohai Shengke’s five brands’ intraocular lenses won national centralized procurement bids in November 2023. Despite a 137% increase in mid-range pre-loaded product sales and a 40% increase in high-end bifocal products, the winning bid prices dropped over 50% compared to pre-bid prices, directly leading to a 14.06% revenue decline.

The orthopedics segment is also deeply affected by policy challenges. After sodium hyaluronate injections were included in provincial centralized procurement in Zhejiang and other regions in 2024, Haohai Shengke’s anti-adhesion materials revenue declined by 4.77%, and medical-grade sodium hyaluronate gel revenue decreased by 4.35%. Although the company claims “multiple mid-to-high-end products are progressing smoothly in R&D,” the low technical barriers in orthopedics mean that under pressure from competitors like Weigao Group and Chunli Medical, Haohai Shengke’s advantages are limited.

A more profound impact is that centralized procurement policies are reshaping the industry ecosystem. Take artificial joint centralized procurement as an example: the average winning bid price has dropped by 82%, forcing companies to trade volume for price. If Haohai Shengke cannot break through in material innovation or surgical solutions, the orthopedics segment may become a drag on growth.

Amidst the pressure on ophthalmology and orthopedics, the aesthetic medicine segment has performed well, becoming the “hope of the entire company.” In 2024, Haohai Shengke’s aesthetic medicine revenue reached 1.195 billion yuan, a 13.08% increase year-over-year, further increasing its proportion of total revenue to 44.38%. This is a remarkable turnaround from less than 20% in 2020, solidifying it as the company’s largest business.

Among these, hyaluronic acid products contributed 742 million yuan, accounting for 62.05% of the total, up 23.23% year-over-year. However, behind these impressive figures lie concerns. In terms of growth rate, in 2023, hyaluronic acid products generated 602 million yuan in revenue, a 95.54% increase; although 2024’s revenue still maintained double-digit growth, the growth rate has significantly slowed.

From a market perspective, hyaluronic acid was once the “golden track” of the aesthetic medicine industry, but it has now fallen into serious internal competition. By 2024, over 50 Class III medical devices for hyaluronic acid have been approved domestically, with more than 400 brands circulating. High-end markets are not a blue ocean either. International giants like Allergan’s “Juvéderm” and Swedish Rønnli’s “Rivoliti” dominate the over-8,000 yuan price range, while domestic manufacturers like Aimeike and Huaxi Bio are accelerating their high-end strategies.

A more severe threat comes from the rise of substitutes. In recent years, overfilling with hyaluronic acid causing “puffed-up faces” has frequently been criticized by consumers. Stimulating collagen regeneration, hydroxyapatite (commonly known as “少女针” or “Girl Needle”) is gradually becoming a new favorite in the industry. According to forecasts by Frost & Sullivan, by 2027, China’s collagen market will reach 173.8 billion yuan, with recombinant collagen accounting for over 60%.

Although Haohai Shengke has entered the smart cross-linked collagen product space, its R&D progress lags behind pioneers like Jinbo Bio. Whether it can catch up remains uncertain. Additionally, the collagen track shows signs of overheating. By the end of 2024, the NMPA had accepted 17 applications for Class III recombinant collagen products, raising concerns about price wars.

Furthermore, while Haohai Shengke has offset the pressure from centralized procurement with high-margin hyaluronic acid business, this “robbing Peter to pay Paul” growth model is questionable if hyaluronic acid sales need to grow at double digits annually just to offset declines in traditional businesses.

Apart from hyaluronic acid, the company’s other pillar in aesthetic medicine—radiofrequency and laser devices—has performed poorly due to policy adjustments. In March 2022, the National Medical Products Administration upgraded the regulatory category of radiofrequency treatment devices from Class II to Class III, requiring that from April 1, 2024, products without a medical device registration certificate cannot be produced, imported, or sold.

This policy may directly impact the company’s globalization strategy. Haohai Shengke’s Israeli subsidiary EndyMed’s radiofrequency skin care devices previously saw rapid growth in China, but with increased regulatory thresholds, their products need to reapply for Class III certification, stalling market expansion. Meanwhile, overseas markets also face stricter regulations in Europe and the US. Under these pressures, the radiofrequency device segment is unlikely to see a short-term recovery. Although the policy grace period has been extended to 2026, revenue from related businesses still declined 6.97% in 2024.

Looking ahead, under the continued squeeze of centralized procurement, the rapid decline of aesthetic medicine dividends, sluggish growth in traditional businesses, and intensifying industry competition, hyaluronic acid may also struggle to sustain. As the industry shifts from a “win-win” era to a “hard-fought” mode, whether Haohai Shengke can maintain its leading position remains to be seen.