Inject hyaluronic acid into drinking water, Huaxi Biotech enters the food industry

Facing the tens of billions of food-grade hyaluronic acid market, Huaxi Biological does not want to be only a raw material supplier

On July 9th, at an industry forum in Jinan, Huaxi Biotech (688363.SH) solemnly introduced the newly launched “Shuijiquan” this year. This is not an ordinary mineral water, but “hyaluronic acid drinking water”, each bottle contains 83 mg of hyaluronic acid.

This product came out thanks to the approval of “Sodium Hyaluronate” as a new food material by the National Health Commission in January 2021, which can be used in dairy products, candy and other food and beverages.

Hyaluronic acid (Hyaluronic Acid, referred to as HA), is public known hyaluronic acid. It usually exists in the eye vitreous, joints, umbilical cord, skin and other parts of humans and animals in the form of sodium salt, that is, “sodium hyaluronate”. Hyaluronic acid has the characteristics of viscoelasticity, water retention, histocompatibility and non-immunogenicity.

China is the world’s largest producer and seller of hyaluronic acid raw materials. In 2019, Huaxi Biotechnology accounted for nearly 40% of the global raw material market. This company has been focusing on hyaluronic acid raw materials and medical aesthetic end products for many years. Beginning in 2020, Huaxi Biotechnology has begun to directly face the consumer market through functional skin care products, and now it has launched food and beverages. The company is gradually moving from a B2B raw material supplier to a B2C brand.

“Selling raw materials is not enough.” Zhao Yan, chairman of Huaxi Biotechnology, said in an interview with a reporter from Caijing. In Europe, America, Japan and South Korea, sodium hyaluronate has been developing in the food industry for many years, while China has just started. The use of hyaluronic acid in food requires industry pioneers, so Huaxi Bio is determined to make its own brand.

Hyaluronic acid cosmetic effect in the US medical market has been recognized, but in the food sector, efficacy of hyaluronic acid remains controversial. Mengniu Group R&D engineer Shi Yudong mentioned on the forum that 0.2 g of sodium hyaluronate is allowed to be added to each kilogram of raw dairy products, and the recommended daily amount is 200 mg. Based on this conversion, consumers need to drink one kilogram of milk added with hyaluronic acid every day to reach the recommended amount, which is almost difficult to achieve. “We will organically combine sodium hyaluronate with some other functional ingredients through research and development in the future, hoping to achieve a result of 1+1 greater than 2.” He said.

Some policy makers also said that to expand the market for food-grade hyaluronic acid, companies must answer questions about efficacy rigorously. “A bottle of Shujiquan has 83 mg of hyaluronic acid. How much can be absorbed and where it works must be studied. Otherwise, what do ordinary people believe? When he drank 100 bottles, 10,000 bottles, nothing changed, how do you Explain?” Jin Xiaotao, former deputy director of the National Health and Family Planning Commission and president of the Chinese Society of Health Information and Healthcare Big Data, said at the forum.

You can eat hyaluronic acid

Hyaluronic acid, also known as hyaluronic acid, was first used as a filler or injection product in plastic injection treatment projects. In the field of cosmetics, hyaluronic acid-added lotions, lotions, lipsticks, creams, etc. have also appeared on the market.

In the food field, studies have found that hyaluronic acid can be absorbed by human tissues such as joints and skin after oral administration. Guo Xueping, deputy general manager and chief scientist of Huaxi Biology, published a paper “Study on the improvement effect of oral hyaluronic acid on skin moisture and antioxidant effect in vivo” in the journal Food and Drugs in 2016, which is called oral hyaluronic acid It can improve the moisture of human skin and has antioxidant effect in the body.

In 2008, the National Health Commission approved sodium hyaluronate as a new resource food, and the scope of application was limited to health food. Since then, a variety of health foods with added hyaluronic acid appeared in China, mainly from Huaxi Biotech and Freda Biotech, such as Plumoon Pulameng Shuiguang Pills, Hyaluronic Acid Oral Liquid, and Sodium Hyaluronic Acid Oral Solution Wait.

Further liberalization of the policy took place in January 2021, the National Health Commission approved sodium hyaluronate declared by Huaxi Biotech as a new food raw material, and the scope of use is milk and dairy products, beverages, alcohol, cocoa products, chocolate and chocolate Products (including cocoa butter substitute chocolate), sweets, and frozen drinks, excluding food for infants and young children. This means that the range of hyaluronic acid can be added to foods to further expand.

Inject hyaluronic acid into drinking water, Huaxi Biotech enters the food industry

Huaxi Bio’s “Black Zero” snack products contain sodium hyaluronate. Photography: Yang Liyun

As the main promoter of this field, Huaxi Biotech regards 2021 as the starting year of its food terminal business, launching the food terminal brand “Black Zero” in January and “Shuijiquan” in March. Each bottle of Shuijiquan is 420ml, and the bottle body is marked “Contains 83mg Huaxi Hyaluronic Acid”. Zhao Yan explained that this content is determined in accordance with relevant standards approved by the state. “

Shuijiquan has been on the shelves of e-commerce companies such as Tmall. The price of 6 bottles is 46.8 yuan, which is 7.8 yuan per bottle, which is 2 to 3 times that of ordinary mineral water. In the product details, there is the words “Oral hyaluronic acid can increase skin moisture”, and a set of controlled test data is given. The conclusion is that “52 subjects who took sodium hyaluronate 120 mg/day for 45 consecutive days have obvious effects on skin moisture. “Improving effect”; but at the same time it is noted that “experimental results are for reference only, and the specific conditions vary from person to person”

Guo Xueping said that around 2000, he noticed that Japan had added sodium hyaluronate to foods, and its application was very common. Since then, Huaxi Biotech has been making relevant declarations in China. In this process, Chinese consumers have been purchasing health foods containing sodium hyaluronate from overseas travel, cross-border e-commerce and other channels. The American brand “MoveFree Festival” under Jesse. Huaxi Biology has been the company’s hyaluronic acid raw material supplier since 2003.

“Because consumers have this kind of demand, this is the driving force for our research and development of this product.” Guo Xueping said that this year the National Health Commission approved sodium hyaluronate as an addition to ordinary food, which is an opportunity for the development of related food industries.

Huaxi Biological does not want to be only a supplier of raw materials

Huaxi Biology is a hyaluronic acid industry chain company integrating R&D, production and sales. According to the financial report, the company has three main business segments: raw material products, medical terminal products, and functional skin care products. In 2020, Huaxi Biotech realized an operating income of 2.633 billion yuan, a year-on-year increase of 39.63%; net profit was 647 million yuan, a year-on-year increase of 10.5%.

Raw material products are the business that Huaxi Biotech started, and it is also its foundation. At present, the hyaluronic acid it has developed includes more than 200 specifications of pharmaceutical, cosmetic and food grade products, which are used in the fields of medicines, medical devices, cosmetics, functional foods and general foods. In 2020, the company’s raw material product revenue was 703 million yuan, accounting for 26.73% of the total.

Medical terminal products are mainly divided into two categories: medical beauty and medicine. Medical beauty includes soft tissue fillers, medical skin wound protectors, etc.; medical products include ophthalmic viscoelastics, medical lubricants and other medical equipment products, and bone and joint cavity injections. . In 2020, the revenue of this sector is 576 million yuan, accounting for 21.88% of the total.

In terms of functional skin care products, Huaxi Biotechnology has developed a series of products for sensitive skin, impaired skin barrier, facial redness, acne and other skin problems. The most famous of which is the “Run Baiyan Transparent” packaged similar to eye drops. “Acid time polishing stock solution” series of products. In 2020, functional skin care products will achieve revenue of 1.346 billion yuan, contributing 51.15% to the company’s overall revenue.

In 2020, Huaxi Biotech has substantially adjusted its positioning from a raw material supplier to a brand owner, focusing on promoting multiple brands such as Runbaiyan, Quandi, and Mibeier, and functional skin care products have supported half of the country. In this business segment, Runbaiyan brand achieved revenue of 565 million yuan, a year-on-year increase of 65.29%, becoming the leader.

The rapid growth is directly related to the huge amount of advertising. Taobao live broadcast, Xiaohongshu and other e-commerce and social media are flooded with Huaxi Biological products. During the reporting period, Huaxi Biotech’s advertising and publicity expenses totaled 125 million yuan, and online promotion service fees totaled 493 million yuan.

Zhao Yan said that starting from 2019, Runbaiyan and Wei Ya cooperated, and the head anchor accounted for as much as 40% of the overall sales of Runbaiyan. However, she also said that for Huaxi Bio’s consumer brand, the role of the head anchor is mainly in brand promotion, not in core sales channels. “The anchor solves the consumer’s cognitive problem, but the consumer’s recognition of us depends on our product power. Only the repurchase rate can tell whether consumers agree with the product. Our repurchase rate exceeds 40%.”

In Tianfeng Securities food and beverage industry analyst Wu Wende said the Chinese production of hyaluronic acid food grade raw materials have been supplied to foreign brands for many years, the upstream industry chain maturity. The accumulation of the industrial chain is the foundation. After the policy is liberalized, China’s sodium hyaluronate has a huge potential for feeding.

In the long run, Huaxi Biological is not satisfied with being a raw material supplier. Zhao Yan told a reporter from Caijing: “Selling raw materials is not enough. The National Health Commission has approved it. If we sell raw materials one by one, it is only an ingredient. No one will pay attention to the health of life. What role can it play? There must be pioneers and leaders. Now that we have achieved the world’s leading position, then this responsibility naturally falls on us.”

Zhao Yan said that the reason why Huaxi Biotech made its own terminal brand of sodium hyaluronate food is because no other company on the market is doing similar science popularization and promotion. “How does this substance help human life and health? If Huaxi Biology does not come to do this work, no one will do it.” She said, “Now Huaxi Biology wants to promote the entire industry. We haven’t done it as a business this year. , This piece is not in the sales revenue plan.”

Huaxi Biotech also strengthens the industrial chain through mergers and acquisitions. In April 2021, Huaxi Biotechnology completed the acquisition of 100% equity of Dongying Forster Bioengineering Co., Ltd. (hereinafter referred to as “Forster Company”) for 290 million yuan. The latter is mainly engaged in the production and sales of hyaluronic acid raw materials. The hyaluronic acid raw materials it produces are mainly food grade, supplemented by cosmetics. The current annual production capacity of hyaluronic acid is 100 tons. According to the Frost&Sullivan report, according to the sales volume of the global hyaluronic acid raw material market in 2019, Frost Company accounted for 8%. The acquisition of Foster Company will help increase Huaxi Bio’s overall production capacity and enrich the raw material sales area.

Inject hyaluronic acid into drinking water, Huaxi Biotech enters the food industry

Huaxi Bio-Hyaluronic Acid Plant is located in Jinan, Shandong. Photography: Yang Liyun

The 2020 annual report of Huaxi Biology shows that in 2021, it will focus on promoting the market application education of food-grade hyaluronic acid, actively expanding core strategic customers, and achieving a substantial increase in domestic sales. This is the fourth largest business segment that the company is striving to build.

On July 1, Huaxi Biological released a performance forecast for the first half of 2021. Revenue is expected to reach 1.847 billion yuan to 1.942 billion yuan, an increase of 95%-105% year-on-year; net profit is expected to be 347 million yuan-374 million yuan, year-on-year An increase of 30%-40%.

Since its listing on the Science and Technology Innovation Board in November 2019, Huaxi Biotech’s share price has been rising. The closing price on July 12 was 285.61 yuan, an increase of nearly 600% from the issue price; the current market value is 137.1 billion yuan.

Is Hyaluronic Acid Food Fudge?

Not only is Huaxi Biological, a raw material supplier, but also food companies are also studying the market for hyaluronic acid. Beijing Yiqing Food Group Co., Ltd. (hereinafter referred to as “Beijing Yiqing”), which owns the “Arctic Ocean Soda” brand, has begun to launch related products. The company’s chief engineer Wang Dong said that the company was excited when it learned that sodium hyaluronate can be used in food, because it is a selling point for enhanced products. Beijing Yiqing has launched three beverages for women, all of which are added with sodium hyaluronate.

Earlier, the second factory of Hankou, the soda brand, also launched the functional sparkling water “Hashui” using Huaxi Biohyaluronic acid as the raw material. A bottle of hyaluronic acid contains 68 mg. The slogan is “Drink water smooth muscle.” The poster of Hashui declared. , “Continuous drinking for 45 days can significantly improve skin moisture content and increase skin elasticity.”

Inject hyaluronic acid into drinking water, Huaxi Biotech enters the food industry

The second factory in Hankou launched the functional sparkling water “Hashui” using Huaxi Biohyaluronic Acid as the raw material. Photography: Yang Liyun

A person in the beverage industry, who did not want to be named, told the Caijing reporter that the current daily intake of 200 mg recommended by the National Health Commission limits the amount of hyaluronic acid added to food and beverages. If the amount is too small, it will be harmful to the human body. It has no practical effect. For companies, the cost of adding hyaluronic acid to their products is still high. If the price increases accordingly, it will not be conducive to product promotion in the fast-moving consumer goods industry. In addition, subdivided regulations and inspection methods are not yet complete, and these factors have left a large number of companies in a wait-and-see state.

“Sodium hyaluronate’s move towards food and nutrition and health is a milestone. But it is not enough to stop now.” Jin Xiaotao said on the forum: “Hyaluronic acid has entered the food industry. A very important issue, how about absorption? Now one The bottle of water muscle spring contains 83 mg of hyaluronic acid. How much can it absorb? Where does it work? These are new things and must be studied, otherwise what do ordinary people believe? Drinking a bottle today will not work, drinking a bottle tomorrow will not work , I won’t drink it the day after tomorrow.”

Jin Xiaotao added: “For example, the old man now has bad knee joints. When he has drunk 100 bottles or 10,000 bottles, nothing has changed. How can you explain? How can you let this part of hyaluronic acid act on my knee? This is Precision issues. These things must be done if a company wants to grow and become a new growth point in the food industry.”

“Now is a digital economy, and everything is data-driven. Is there any data for the problems of absorption and application efficiency? No, it means that we are still at the primitive stage and must strengthen research.” He said: “When you see opportunities, We must see the challenge. It is not that we start to fudge as soon as we do this. We must consider both social and economic effects. Food is the priority for the people, and security is the first.”

The oral effect of hyaluronic acid is also quite controversial in academic circles. In response, Guo Xueping said: “This question is understandable. Just like collagen five years ago, the whole public opinion was questioned, but collagen is still active in the cosmetics field. We must respect consumer choice and be transparent. Sodium glutamate consumption was not caused by Huaxi’s “flickering”. This market has existed for 20 or 30 years, and we have just conformed to market demand.”

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