Text丨Bu Wanqiao
Editor丨Shi Hangqian
The principle of "curing the disease before it happens" has been passed down for thousands of years.
During the Spring and Autumn Period and the Warring States Period, the famous doctor Bian Que passed by Cai Guo and told Cai Huan that he should be treated in time for public illness, but the latter disagreed; Ten days later, Bian Que once again reminded that the disease had reached the skin, but Cai Huan Gong still didn't care; Ten days later, Bian Que said that his illness had reached his stomach, but Cai Huan Gong still didn't believe it. After another ten days, Bian Que saw Cai Huan Gong turn around and leave. Cai Huan Gong asked the reason, and it turned out that the disease had penetrated into the bone and could not be treated.
This is the story of the famous doctor Bian Que recorded in "Han Feizi · Yu Lao".
Now, the health consciousness of "curing the disease before it happens" has been pushed to a climax by the public after three years of the epidemic.
According to Euromonitor, the size of China's health food market was 216.765 billion yuan in 2021 and is expected to reach 315.82 billion yuan in 2027. In addition, iiMedia Consulting predicts that with the improvement of consumers' health awareness, the health care products market will continue to grow, among them, the "silver-haired group" and the "younger generation" will be the main drivers of the industry's growth, and scientific and technological progress will also drive the upgrading of related products and services.
It's just that consumers are tightening their wallets while being more health-conscious. How do health care and tonic companies continue to maintain profitability in the cracks? We tried to find the answer from the financial reports of the relevant listed companies.
01
Tonic increases revenue and profits
The performance of health care products declined
In April this year, Yanzhiwu, the "first share of bird's nest", released its first annual report since its listing.
During the reporting period, Yanzhiwu's revenue was 1.964 billion yuan, a year-on-year increase of 13.59%; net profit attributable to shareholders was 201 million yuan, a year-on-year increase of 5.23%. Adjusted net profit was RMB244 million, up 15.8% year-on-year. This upstart who was "eaten and listed by a noble lady" simply and directly showed his growth in the annual report: the net profit in the first two years was 120 million yuan and 170 million yuan respectively, with a compound annual growth rate of 29.1%.
Dong'e Ejiao, which is also a tonic, is also enviable for its high gross profit.
According to the announcement, the gross profit margin of Dong'e Ejiao in the first quarter of 2024 will reach 71.79%, an increase of 1.01% year-on-year. During the quarter, Dong'e Ejiao's operating income was 1.453 billion yuan, a year-on-year increase of 35.95%; net profit attributable to shareholders of listed companies was 353 million yuan, a year-on-year increase of 53.43%. This achievement is close to the upper limit of its performance forecast. During the reporting period, Dong'e Ejiao's net profit margin was 24.33%, an increase of 2.77% over the same period last year.
In addition to the tonic products that have been traced since ancient times, the modern "preventive treatment" products are more nutrition, health food, functional food and other health products.
In the first quarter of 2024, Jiangzhong Pharmaceutical's revenue declined, but its net profit increased.
During the reporting period, Jiangzhong Pharmaceutical's revenue was about 1.227 billion yuan, a decrease of 8.74% compared with the same period last year, and the net profit attributable to shareholders of listed companies was about 267 million yuan, an increase of 9.99% year-on-year. Among them, the total revenue of big health products and other products was 109 million yuan, a year-on-year decrease of 40.33%, but the estimated gross profit margin increased by 8.41% compared with the same period last year, the largest increase among all business types.
According to the announcement, this is due to the adjustment of product structure, during which inefficient businesses such as OEM and wholesale of medical supplies have been reduced in big health products, which has increased the gross profit margin although the overall revenue scale has declined.
Xianle Health, which provides product development and production services for these enterprises, also gave an answer sheet for the growth of revenue and net profit.
According to the financial report, Xianle Health reported a total operating income of 952 million yuan in the first quarter of 2024, a year-on-year increase of 35.51%, and a net profit attributable to the parent company of 63.0297 million yuan, a year-on-year increase of 114.39%. The gross profit margin was 30.62%, a year-on-year increase of 10.66%, the net profit margin was 5.66%, a year-on-year increase of 111.93%, the total sales expenses, management expenses and financial expenses were 181 million yuan, and the three fees accounted for 19.04% of the revenue, a year-on-year decrease of 9.41%.
The performance of such enterprises often represents the development of the industry. Guolian Securities expects that in the context of the improvement of residents' health awareness, traditional dosage form products such as soft capsules, tablets and powders of Xianle Health will continue to maintain growth, and the revenue is expected to increase by 10% year-on-year in 2025, while core dosage forms such as gummies and functional drinks are expected to have a higher growth rate with the increase in market penetration.
However, the performance of the "health care product leader" Tomson Beijian in the first quarter seems to be unsatisfactory.
Although from the perspective of the whole year of 2023, Tomson Beijian's operating income was 9.407 billion yuan, an increase of 19.66% over the same period of last year, and the net profit attributable to shareholders of listed companies was 1.746 billion yuan, an increase of 26.01% over the same period of last year, and the gross profit margin and net profit margin increased slightly. However, in the first quarter of 2024, Tomson Beijian achieved operating income of 2.646 billion yuan, a decrease of 14.87% from the same period of the previous year; The net profit attributable to the parent company was 727 million yuan, down 29.43% from the same period last year. The gross profit margin was 69.90%, down 0.42% from the same period last year, and the net profit margin was 27.17%, down 6.61% from the same period last year.
Tomson Beijian explained that the decline in revenue was due to the strong market demand for immune-enhancing related products in the same period last year, which created a high base. The decrease in profit was mainly due to the increase in investment in brand promotion compared with the same period last year. In the first quarter, Tomson's sales expenses were 826 million yuan, a year-on-year increase of 7.87%.
02
Collective investment in R&D
"Volume products" become the same direction
In the industry that is concerned about efficacy, the ratio of R&D to marketing investment is an eternal issue.
In 2023, the annual R&D investment of Tomson Beijian will be 179 million yuan, a year-on-year increase of 13.15%; In 2022, the R&D expenses of Tomson Beijian will be 158 million yuan, a year-on-year increase of 7.39%; In 2021, Tomson's R&D expenses will be 150 million yuan, a year-on-year increase of about 7.14%.
In the 2024 letter to shareholders from Chairman of Tomson By-Health, Liang Yunchao said: "Marketing is just an amplifier of good products, and giving up product innovation is giving up the future. The designated purchase rate, repeat purchase rate and net promoter rate after the brand enters the minds of consumers is the biggest moat." Liang Yunchao said that the key word of Tomson Beijian in 2024 will be "cash", in which the strong scientific and technological transformation strategy should be fulfilled one by one in scientific nutrition and more professional product innovation.
It can also be seen from the first quarterly report of Dong'e Ejiao that its investment in research and development has increased significantly, and its research and development expenses reached 39.199 million yuan, an increase of 77.77% from 22.0509 million yuan in the same period last year.
According to media reports, Dong'e Ejiao has made great investments in the improvement of the indications and dosage forms of compound Ejiao syrup, among which the research on high-level evidence-based medical proof of compound Ejiao slurry in the treatment of cancer fatigue has achieved certain results.
This can also be reflected in Jiangzhong Pharmaceutical's financial report, whose R&D expense ratio in 2023 will be 3.04%, an increase of 0.46% year-on-year. According to the "2024 "Quality and Efficiency Improvement and Return" Plan released by it, Jiangzhong Pharmaceutical has a clear plan for R&D, including increasing investment in R&D resources, strengthening R&D network construction, deepening R&D pipeline layout, and promoting the transformation and upgrading of intelligent manufacturing, so as to promote more product innovation, technology upgrading, and improve production efficiency and product quality.
In recent years, R&D investment has also shown a steady growth trend. From 2020 to 2023, Yanzhiwu's R&D expenses will be 18 million, 19 million, 24 million, and 26 million respectively, and the increase in its R&D expenses is also reflected in the expansion of product lines.
In 2021, the cooperation between Yanzhiwu and the university confirmed that "bird's nest peptide" has the effects of repairing skin damage, anti-aging and anti-oxidation. Subsequently, "bird's nest peptide" was used as an important ingredient in Yanzhiwu's skin care sub-brand "Yanbaoshi", which became the core selling point of the brand.
03
The product digests quickly
The tonic industry has found a new path to growth
The rapid growth of the tonic industry is accompanied by the continuous enrichment of consumers' segmented needs, which also allows brands to see the opportunity to extend their products to more scenarios.
With the deepening of e-commerce, last year, Yanzhiwu launched a more people-friendly sub-brand "Xiaoyannong" on the basis of the offline high-end "Wanyan" main gift-giving scene. According to the 2023 financial report, the sales volume of "Xiaoyannong" bird's nest porridge has exceeded 1 million copies, becoming a new growth point for Yanzhiwu.
Bird's Nest products mainly include three categories: pure bird's nest, "bird's nest+" and "+ bird's nest". Among them, the revenue of pure bird's nest products was 1.794 billion yuan, a year-on-year increase of 9.53%, accounting for 91.34% of the total revenue; The revenue of "bird's nest+" and "+ bird's nest" products was 142 million yuan, an increase of 94.2% year-on-year, accounting for 7.2% of the total revenue
As a traditional Chinese medicine company, Dong'e Ejiao has insight into the trend of "health preservation", and has crossed over from OTC pharmaceutical companies to the field of food FMCG by launching its sub-brand Taohuaji (the main product is Ejiao cake). According to media reports, Peach Blossom Ji has achieved a substantial and sustained increase in sales from tens of millions to 600 million yuan.
Deng Delong, general manager of Trout (China) Strategic Positioning Consulting Company, pointed out in a live broadcast that Dong'e Ejiao implements a corporate strategy of "single focus and multiple brands", which includes the concepts of "Ejiao +" and "+ Ejiao". Specifically, Dong'e Ejiao has entered different markets through different positioning, such as compound Ejiao paste is positioned as a health care product that replenishes both qi and blood, and Peach Blossom Ji is positioned as a leisure snack, which are all brand extensions and market expansion around the focus of Ejiao.
According to the 2023 annual report, Dong'e Ejiao's overall revenue is 4.715 billion yuan, of which the revenue of compound Ejiao paste (new product line) accounts for nearly one-third.
Its insiders said that compound Ejiao paste is the main product of Dong'e Ejiao's two-wheel drive strategy, with a high growth rate in the past two years, with sales of more than 900 million yuan and 1.5 billion yuan in 2022 and 2023 respectively, and its internal plan is that the revenue target of the product this year is 2.5 billion yuan, an increase of more than 1 billion yuan compared with the sales volume in 2023.
In addition to these listed companies, more and more tonic brands are also carrying out similar explorations, such as Lao Jin Mo Fang, which makes black sesame seeds into black sesame balls, and Bubble Bird's Nest, which makes bird's nest white fungus into ready-to-eat drinks.
Li Youquan, president of Yanzhiwu, once said that if the brand wants to break the circle in the future, it needs to cooperate with other industries, such as making "bird's nest +" and "+ bird's nest" have more "collisions" with consumer goods.
These mean that casual snacking and fast digestion of products are becoming an important means for nourishing brands in the new growth stage. An investor in the nourishing brand Guanzhan also publicly said: "With the comprehensive upgrade of health awareness, healthy consumption will expand to be younger, daily, and self-pleasing." The younger generation has a high degree of recognition of Chinese nourishment, and casual and ready-to-eat, delicious taste, etc., will become an important development direction of Chinese nourishment. ”