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 industry dividend decline, China’s medical aesthetics 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 2020 affected by the COVID-19 pandemic; 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% year-over-year; 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 report card, multiple pressures are reflected: declining industry dividends, centralized procurement policies, and intensifying market competition.

From the segment perspective, 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 the national centralized procurement bid in November 2023. Although sales of mid-range pre-loaded products increased by 137% and high-end bifocal products grew by 40%, the bid prices dropped over 50% compared to pre-bid prices, directly leading to a 14.06% revenue decline.

The orthopedics segment is also deeply entangled in policy challenges. After sodium hyaluronate injections were included in provincial-level centralized procurement in Zhejiang and other regions in 2024, Haohai Shengke’s anti-adhesion materials revenue decreased by 4.77%, and medical sodium hyaluronate gel revenue fell by 4.35%. Although the company claims “multiple mid-to-high-end products are progressing smoothly in R&D,” the orthopedics field has relatively low technical barriers. 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 make breakthroughs in material innovation or surgical solutions, the orthopedics segment may become a drag on growth.

Amidst the pressure on ophthalmology and orthopedics, the medical aesthetics business has performed well, becoming the “hope of the entire company.” In 2024, Haohai Shengke’s medical aesthetics segment achieved revenue of 1.195 billion yuan, up 13.08% 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 segment, with a 23.23% increase year-over-year. However, behind these impressive figures are also 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 year-over-year, the growth rate has significantly slowed.

From a market perspective, hyaluronic acid was once the “golden track” of the medical aesthetics industry, but it has now fallen into serious internal competition. By 2024, over 50 Class III medical device approvals for hyaluronic acid in China have been granted, with more than 400 brands circulating. The high-end market is also not a blue ocean: international giants like Allergan’s “Juvéderm” and Swedish Rynel’s “Ruilan Liti” dominate the 8,000+ yuan price range, while domestic manufacturers like Aimeike and Huaxi Biological are accelerating their high-end strategies.

A more severe threat comes from substitutes. In recent years, overfilling with hyaluronic acid causing “puffed face” problems has been frequently criticized by consumers. Stimulating collagen regeneration, hydroxyapatite (commonly called “少女针” or “Girl’s 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 Biological. 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, raising concerns about price wars.

Furthermore, while Haohai Shengke has offset the pressure from centralized procurement with high-margin hyaluronic acid business, this “borrowing from 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 medical aesthetics—radiofrequency and laser devices—has performed poorly due to policy adjustments. In March 2022, the National Medical Products Administration upgraded the regulation of radiofrequency treatment devices from Class II to Class III, requiring that from April 1, 2024, products without medical device registration certificates cannot be produced, imported, or sold.

This policy may directly impact the company’s globalization strategy. Haohai Shengke’s Israel 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 industry dividends, sluggish traditional business growth, and intensifying competition, hyaluronic acid business alone may 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.