The Most Profitable Logic in Medical Aesthetics Upstream Has Collapsed
-46.64%, -30.82%, -28.20%, -24.84%, -20.5%, turning from profit to loss.
In the first half of 2026, when the year-on-year net profit performances of Haohai Biotech, Bloomage Biotech, Jinbo Bio, Imeik, Giant Biogene, and Fosun Medical are lined up, a crack suddenly appears in the once-solid high-margin narrative of the medical aesthetics upstream.
Profit declines spread from hyaluronic acid, recombinant collagen, and devices to integrated medical aesthetics companies.
Huadong Medicine Group's net profit still grew slightly by 2.53% to RMB 1.861 billion, but its domestic medical aesthetics revenue fell 52.46% to RMB 345 million, and overseas medical aesthetics revenue fell 36.59% to RMB 332 million.
Source: Huadong Medicine H1 2026 financial report
Thus, among eight representative leading companies, seven suffered net profit declines or significant pressure on core aesthetics businesses.
Source: H1 2026 financial reports of 8 companies. Fosun Medical figures in USD, converted at 6.78 CNY/USD.
For the past decade, the upstream medical aesthetics sector was regarded as the closest thing to a "money-printing machine" in consumer healthcare.
Hyaluronic acid, recombinant humanized collagen, and botulinum toxin, along with the Class III medical device approvals behind them, formed a scarcity barrier.
Gross margins of 80% or even 90%+, high repurchase rates, and rapid growth reinforced capital markets' imagination of "high growth, high margin, and anti-cyclicality."
But now, the industry has changed.
Profit Collapse: The Triple Squeeze of Price, Capacity, and Traffic
Attributing the collective pressure on leading companies solely to weak consumption cannot explain the breadth of this decline.
Three more specific clues recur across the interim reports.
Price defenses for basic materials are loosening, depreciation pressure from new capacity is rising, and once-efficient traffic channels are becoming more expensive. They act on selling price, costs, and sales efficiency respectively, converging on the income statement.
First, price wars are eroding scarcity premium.
In the past, the high gross margins of the upstream medical aesthetics sector largely came from the scarcity of compliant licenses and the information asymmetry during the initial product launch period. Class III device approval takes a long time, allowing early license holders to command higher premiums in a supply-constrained market.
By 2026, the supply-side structure has changed.
The number of homogeneous compliant products continues to increase, with more options in monophasic and biphasic HA, and recombinant collagen, giving institutions more bargaining power.
At the same time, downstream aesthetics institutions face customer acquisition pressure, using basic injection procedures as low-price traffic drivers, with "99 yuan HA" and "299 yuan mesotherapy" packages, passing price competition up the chain.
Haohai Biotech provides a typical case.
The company pointed to "intensified market price competition caused by the continuous issuance of new HA product licenses" as a key reason for its poor performance.
During the reporting period, its HA product revenue fell 41.45% to RMB 203 million. Dragged down by a lower share of high-margin products, the company's overall gross margin dropped from 70.17% to 65.46% year-on-year.
For companies that relied on high-margin products to contribute profits, a nearly 5 percentage point change in gross margin is enough to significantly alter earnings elasticity.
Price pressure is also entering the recombinant collagen segment.
Jinbo Bio's overall gross margin fell from 90.68% to 84.70% in the reporting period. The company explained that it "offered price concessions on some products to reward the market."
In a stock-competition environment, such price adjustments reflect increased terminal bargaining power and more similar products.
This means the era of basic materials earning high premiums through scarce supply is passing.
Products that can maintain higher margins in the future will need to rely more on genuine technical differentiation, clinical value, and regulatory barriers.
Second, the capacity overhang: the industry's expansion cycle meets a demand inflection point.
Price determines revenue, while capacity is now squeezing profits from the cost side. During the high-growth period from 2020 to 2023, leading companies generally expanded production lines, hoping to use larger capacity to meet continued demand growth.
But fixed-asset investment has a significant lag. By the time a batch of projects were completed and converted to fixed assets in 2025 and 2026, the market environment had already changed.
Accounting treatment brings this mismatch directly into the income statement. Once fixed assets are put into use, even if capacity is not fully utilised, depreciation and amortisation must be recorded as current-period costs.
For high-margin industries, when volume growth cannot cover new fixed costs, profit declines faster than revenue changes.
Jinbo Bio's interim report illustrates this clearly. In H1 2026, the company's operating costs grew 47.34% year-on-year, while revenue slightly declined.
The report explained that the production workshop for injectable recombinant humanized collagen was transferred to fixed assets, but capacity has not yet been fully utilised, thus increasing asset depreciation and amortisation included in product costs.
The "growth reserve" built during expansion has become a fixed cost that needs time to digest as demand slows.
Haohai Biotech faces similar pressures. Its new Songjiang base project, including medical device workshops and supporting facilities, was put into use in February 2026, adding over RMB 21 million in new depreciation and amortisation. Combined with HA price competition, the profit side faces a double squeeze.
Source: Haohai Biotech and Jinbo Bio H1 2026 financial reports
The manufacturing nature of the medical aesthetics upstream has become more pronounced.
Capacity planning, asset turnover, and cost control are now as important as product innovation.
During the high-growth period, the competition was about expansion speed; in the stock phase, it tests who can convert capacity into actual sales and cash flow.
Third, traffic costs: brands are paying the price for the old growth model.
The change comes from channels. Over the past five years, growth in light aesthetics, functional skincare, and some home-use beauty devices has been highly tied to e-commerce and livestreaming.
Influencer livestreams, top anchors, and public-domain ads can amplify GMV in a short time, but as traffic costs rise, brands must pay increasingly higher fees for this growth model.
The typical pattern is "lowest price online + high revenue share." Top anchors charge both slot fees and commissions while demanding low-price mechanisms, widening the conflict between volume and profit.
More troubling, online low prices can disrupt the pricing system of offline aesthetics institutions.
Giant Biogene has already experienced short-term pressure from channel adjustments. In H1 2026, its revenue fell 6.3%, which the report linked to sales structure adjustments in professional skincare products, including "declining revenue from influencer livestream channels."
As brands reduce reliance on influencer livestreaming, own channels and organic sales must take over, inevitably affecting revenue during the transition.
Bloomage Biotech's moves are more pronounced. During the period, its selling expenses fell from RMB 808 million to RMB 599 million, down 25.84% year-on-year, explained as "a decrease in channel and promotion expenses for skin science innovation transformation business."
At the same time, revenue fell 22.32% year-on-year. This set of data presents a proactive adjustment: buy less traffic, revenue takes a short-term hit, then rebuild brand and channel efficiency over time.
Source: Bloomage Biotech and Giant Biogene H1 2026 financial reports
Price wars, depreciation, and traffic costs come from different links in the industry chain, but all point to the fact that the medical aesthetics upstream has entered a competition of operational quality.
Inefficiencies that could previously be covered by high margins will now be reflected faster in net profits.
The Only Outlier Among Eight Leaders: Sihuan Pharma's Two Cards
Among the eight samples, Sihuan Pharma provides the sharpest contrast.
In H1 2026, its medical aesthetics revenue was RMB 693 million, up 18.5% year-on-year; group profit attributable to owners was RMB 225 million, up 119.0%.
This performance cannot be seen merely as an accidental exception in the industry headwind; it provides two threads worth unpacking.
First, how did the aesthetics business move from single-product competition to a portfolio approach?
Second, how did the group improve profit and cash flow through asset adjustments?
First, the solution: from selling products to helping institutions make money.
Once basic materials enter price comparison, relying solely on a single injection to win institutional procurement easily leads to homogeneous competition.
Sihuan Pharma summarised its aesthetics business change in the report as having "completed the strategic transformation from single-product sales to a comprehensive medical aesthetics solution provider."
This transformation is first built on a channel entry point. Using its exclusive botulinum toxin brand Letybo as a high-frequency entry, Sihuan Pharma establishes ongoing cooperation with compliant B-end institutions through high-repurchase items like wrinkle reduction and slimming.
On this basis, the company introduces regenerative materials and photoelectric devices into the same product portfolio, including self-developed PLLA collagen stimulators, PCL fillers, and the Sylfirm X dual-wave RF microneedling system from Korea.
The report also mentions combination treatment protocols such as "contour fixing + advanced anti-aging."
The value of a portfolio lies in shifting the institution's focus from the purchase price of a single product to whether a whole course of treatment can lift customer spending and repurchase rates.
Botulinum toxin serves as a high-frequency entry, while regenerative materials and photoelectric devices provide higher-ticket items, creating synergies among products.
For aesthetics institutions facing rising customer acquisition costs, increasing customer lifetime value is more important than simply adding new customers.
This explains the commercial significance of Sihuan Pharma's "comprehensive solutions": upstream players begin to participate in institutions' treatment design and profit models, rather than just acting as suppliers.
The more transparent the product price, the more companies that can provide combination treatments, training, and product synergies can shift competition from price to service and outcomes.
Second, asset restructuring: using "subtraction" to improve cash flow and focus.
Sihuan Pharma's 119% profit growth also needs to be understood in the context of asset disposals. The traditional generic drug business recorded a loss of RMB 74.1 million in the period, and under the pressure of centralized drug procurement price cuts, this non-core business continued to drag down group performance.
The company chose to clean up non-core traditional pharmaceutical assets. The report shows that the disposal of a subsidiary during the period recognised a gain of approximately RMB 154 million. This non-recurring income significantly improved the current income statement and partially offset the losses from the generic business.
Source: Sihuan Pharma H1 2026 financial report
What's more noteworthy is the resource reallocation after asset adjustments.
Exiting low-efficiency assets means cash, capacity, and management energy can be more concentrated on the two business lines of "medical aesthetics + innovative drugs."
For companies in a period of industry adjustment, what determines profit quality, in addition to growth, includes which businesses are worth continuing to occupy capital.
Thus, Sihuan Pharma's "counter-trend" performance consists of two parts: the aesthetics business enhances institutional value through integrated solutions, and the group improves resource allocation by divesting low-efficiency assets.
The former answers how to grow, and the latter answers how to protect profit and cash flow.
The Second Half Race: Four Paths to New Growth
The profit declines in the interim reports have not stopped industry investment.
On the contrary, as the old models of basic materials, indiscriminate capacity expansion, and expensive traffic begin to fail, leading companies are investing money and organisational capabilities into new competitive moats.
The eight interim reports reveal four directions.
Higher-barrier products, crossover from serious medicine, globalisation, and AI plus synthetic biology-driven R&D.
First, on the technology upgrade front, regenerative materials and compliant photoelectric devices are raising the competitive bar.
As basic hyaluronic acid and collagen products become easier to compare on price, companies need to find more difficult-to-copy products.
Regenerative tissue materials and compliant photoelectric equipment appear repeatedly in the reports.
Haohai Biotech's business structure shows this differentiation. Its HA business is under obvious pressure, but products in the "strategic entry into regeneration and repair" field are beginning to contribute incremental growth.
During the period, regenerative tissue materials including decellularised dermal matrix, biological amniotic membrane, and allogeneic bone together generated over RMB 61.46 million in revenue.
Photoelectric devices also benefit from higher compliance thresholds. In the context of radiofrequency beauty devices being classified as Class III medical devices and unlicensed products being phased out, Haohai's radiofrequency product lines (e.g., EndyMed series) and matching treatment heads showed steady growth in the domestic market, with sales revenue increasing by more than 20% year-on-year.
This contrast suggests that product premiums in the second half of medical aesthetics will depend more on regulatory barriers, technical difficulty, and clinical value.
Basic materials still have a market, but the incremental growth that can truly improve profit structure is more likely to come from high-barrier categories.
Second, medical crossover: rewriting the boundaries of body contouring with GLP-1.
Another path comes from outside the aesthetics industry. Weight management has long been an important extension scenario for aesthetics institutions, with procedures like liposuction and cryolipolysis occupying high-ticket positions.
The rapid development of GLP-1 receptor agonists is blurring the line between serious medicine and medical aesthetics.
Huadong Medicine is a typical player on this path. Although its domestic aesthetics revenue fell 52.46% and overseas aesthetics revenue fell 36.59%, the group's overall net profit still grew slightly by 2.53% to RMB 1.861 billion.
The report disclosed that its self-developed oral small-molecule GLP-1 receptor agonist HDM1002 for weight management has reached the primary clinical endpoint in a Phase III trial in China, with an NDA submission expected in Q4 2026; the weight management indication for semaglutide injection is under NDA review.
If these products advance smoothly, traditional pharmaceutical companies will enter the weight management market with drug R&D capabilities and sales networks.
For aesthetics companies that rely solely on devices and materials, such cross-border competition introduces new comparative dimensions: users may choose between drugs, devices, and surgery, and the product boundaries for body aesthetics will also shift.
Third, globalisation: domestic overcapacity forces products overseas.
After entering a stock-competition environment at home, the significance of globalisation has evolved from seeking additional growth to diversifying single-market risk and validating product competitiveness internationally.
Fosun Medical demonstrates the hedging effect of its global network. In H1 2026, its North American revenue fell 21.6%, but Asia-Pacific grew 19.1%, and the Middle East & Africa grew 20.9%, ultimately supporting the company's total revenue to maintain 3.6% positive growth.
Different regions are at different cycles, allowing global players to offset mature market fluctuations with growth in emerging markets.
Jinbo Bio represents another type of globalisation: taking Chinese-origin materials and Class III devices to overseas markets.
The report shows that its recombinant humanized collagen Class III devices have obtained injection device registrations in Vietnam, Thailand, the Philippines, and Malaysia, and have begun commercialisation in Southeast Asia. Its self-developed recombinant type III humanized collagen also received US Self-GRAS certification.
From raw material export to terminal devices and original biomaterials, the value chain position has shifted.
Whether overseas markets can become a second growth curve ultimately depends on registration, channels, and commercialisation efficiency, but it has become an unavoidable long-term capability for leading companies.
Fourth, betting on underlying R&D: using AI and synthetic biology to gain pricing power.
After the traffic dividend fades, companies need to re-establish differentiation through more verifiable technical capabilities. In the 2026 interim reports, AI and synthetic biology have been placed more prominently by multiple companies.
Bloomage Biotech has designated 2026 as the "AI Year." Despite declining revenue, its R&D investment as a percentage of revenue rose from 10.22% to 12.07%.
The report disclosed that the company is building an "AI Life Science Agent" and an "AI Pilot Smart Brain"; in manufacturing, AI has reduced equipment anomaly recognition and alert time from hours to seconds.
Jinbo Bio's investment is more infrastructure-oriented. The company's national major science and technology project "FAST Collagen Database Phase I (AI Biological Computing Center)" is now operational, with the database having completed more than 1.8 million sequences and over 500,000 structural predictions, using "AI dry lab + high-throughput wet lab" to drive collagen structure prediction, molecular screening, and functional optimisation.
Giant Biogene also mentioned in its report its collaboration with dProtein to build an AI R&D platform, covering the entire medical aesthetics R&D chain with AI technology.
These investments are still in the capability-building phase and may not directly translate into profits in the short term, but those who can find new molecules faster, shorten R&D cycles, and improve manufacturing efficiency will have a better chance of gaining pricing power for next-generation products.
It is clear that the medical aesthetics upstream is moving from marketing efficiency competition to R&D efficiency competition.
Value Revaluation: New Opportunities in Aesthetics
The first half of 2026 is likely to become an important watershed for the medical aesthetics upstream.
Looking at the eight leading companies' reports together, the old growth combo – reliance on approval scarcity, basic material high margins, rapid capacity expansion, and traffic spending – can no longer operate as before.
Falling prices increase the importance of product differentiation; capacity conversion makes asset efficiency a core metric; more expensive traffic forces brands and channels to rebuild organic growth capabilities.
At the same time, Sihuan Pharma's portfolio approach, Haohai's regenerative materials and compliant devices, Huadong's GLP-1 pipeline, Fosun and Jinbo's globalisation, and Bloomage and Jinbo's investment in AI infrastructure all point to new ways of competing.
The medical aesthetics upstream thus returns to two more fundamental principles.
First, advanced manufacturing: companies must manage capacity, costs, supply chains, and asset turnover; expansion alone no longer equals growth.
Second, life sciences: companies need to build truly verifiable technical moats in materials, proteins, synthetic biology, AI R&D, and crossover with serious medicine.
This also means that future industry concentration may not be determined solely by who gets more approvals.
Companies that can withstand heavy-asset cycles, continuously improve R&D efficiency, build overseas commercialisation capabilities, and provide more complete solutions to downstream institutions will have a better chance of navigating this adjustment.
The "myth" of the medical aesthetics upstream is receding, but the industry is not losing value. It is simply moving from an industry that made money through scarcity and rent to one that needs to make money through operational efficiency, product capability, and technological accumulation.
For companies, the most important thing in the next phase is to prove that they can sustain profitability under the new rules.
