Huaxi Biological: a To B raw material business innovation enabling sample
“In fact, we are not only a hyaluronic acid company, hyaluronic acid is just our basic plate.”Zhao Yan, chairman and general manager of Huaxi Biological said at the 2021 performance presentation.As for the positioning of the company, senior executives of the company gave a consistent and clear positioning at the scene, that is, Huaxi Biological is a biotechnology company and a bio-active material company.In the past, Huaxi biological has been a global leader in the research, production and marketing of hyaluronic acid.At present and in the future, the company will do high-tech biological active substance platform enterprises.Huaxi Biological 2021 “report card” can be said to be bright, its revenue and net profit are a record high.Last year, the company achieved revenue of 4.948 billion yuan, up 87.93% year on year;The net profit of the parent was 782 million yuan, up 21.13% year-on-year, and its comprehensive gross margin was 78.06%.Raw material business, as the company’s starting business, is also the foundation of its development.For a long time, raw material business has been defined as “the industry that can see the ceiling at the first sight”, and Huaxi Biological, as the “elder” in the raw material field, carries out raw material r&d and innovation with the methodology of “scientific and technological development”, enabling the upstream and downstream of the industry to constantly break the ceiling of raw material business.The 2021 earnings report offers plenty of clues.In 2021, the raw material business, affected by the overseas epidemic, actively explored the domestic market and achieved a revenue of 905 million yuan, with a year-on-year growth of 28.62%.In terms of specific products, the sales volume of pharmaceutical grade, cosmetic grade and food grade hyaluronic acid was 252 million, 391 million and 108 million, respectively, with year-on-year growth of 15.82%, 15.98% and 36.85%.Among them, pharmaceutical raw materials with a high level of product quality and more complete qualification certification in the domestic and foreign markets to achieve a higher share.It is reported that Huaxi biological is the only domestic fermentation production of sodium hyaluronate API and pharmaceutical excipients approval number, and achieve commercial production enterprises;Internationally, it has obtained 27 registration and filing qualifications including the European Union, the United States, South Korea, Canada, Japan, Russia, India, and has a solid market advantage.In addition, the quality of pharmaceutical products of the company is higher than the quality standards of European Pharmacopoeia, Japanese pharmacopoeia and China. The main quality parameters of nucleic acid, endotoxin and other impurities are 1/50 and 1/20 of the value specified by the international standards of European pharmacopoeia, reaching the international leading level.According to the financial report, the company will further enhance its market competitiveness through aseptic hyaluronic acid high-end product layout in the future.In terms of production capacity, by the end of 2021, the company’s overall hyaluronic acid production capacity is 470 tons. With the continuous release of production capacity in Tianjin, the company’s raw material production capacity will be more robust.Industry insiders said that in terms of the competition situation of hyaluronic acid raw materials, international manufacturers do not have the advantages of scale, manufacturing, supply chain and so on, and basically only produce pharmaceutical and cosmetic hyaluronic acid;However, domestic manufacturers do not have the advantages of science and technology, process, registration and brand, and basically produce cosmetic and food-grade hyaluronic acid, and export to the international market is basically food-grade.It can be seen that Huaxi biology has comprehensive competition barriers in the field of raw materials, and it is very unlikely to be overtaken in the short and medium term.Guanchan.com reporters learned that in addition to hyaluronic acid, Huaxi biological is actively developing other biological active materials, constantly introducing new products to the market.According to Zhao Yan, the company’s hyaluronic acid derivatives, ergothione, ekedoin and other new products have accounted for more than 40% of the total revenue in 2021, 154 million yuan, an increase of 120.33% year on year, is rapidly evolving toward the platform of biological active substances enterprise.Relying on bottom-level innovation to jump out of the “price war” and comply with the market rules, with the increase of hyaluronic acid raw material capacity, the sales price has been declining year by year.According to relevant data, the average price of hyaluronic acid raw materials has decreased from 210 yuan /g in 2017 to 160 yuan /g in 2020.For producers of hyaluronic acid raw materials, the price decline will undoubtedly have a certain impact on their performance.And Huaxi biological has handed over bucking the trend up nearly 30% of the revenue answer sheet.Investigate its reason, it is the difference advantage that the technology innovation of huaxi biology brings.We can get a direct confirmation from the 2021 financial results, the first is a significant increase in R&D investment.In 2021, the company invested 284 million yuan in R&D, an increase of 101.43% over the same period last year;The number of research and development projects is 239.Among them, there are 99 r&d projects in the upstream raw materials field, focusing on the technology, efficacy and application of hyaluronic acid and other bioactive substances.In the field of synthetic biology, a biotechnology that “changes the future”, the company is carrying out research on key technologies and industrial transformation of synthetic biology for functional sugars and amino acids widely used in medicine, cosmetics and food, so as to improve the industrialization efficiency of raw materials and explore more bioactive substances.In addition, Huaxi biological also works with tsinghua University, Tianjin Institute of Industrial Biotechnology, Chinese Academy of Sciences and other top institutions to carry out key technology research and biological manufacturing of a variety of biological active substances.Through synthetic biology, the company has made progress in hyaluronidase, chondroitin sulfate, heparin and collagen.On the one hand, based on the company’s technological strength, quality advantage and supply chain guarantee system, the domestic and foreign head enterprises and Huaxi biological stable cooperation, emerging biological active substances can more easily enter the customer’s supplier system, expand cooperation.On the other hand, huaxi Biological’s largest pilot transformation platform in the world can achieve 0-1-10-100 results conversion, achieve efficient production of new biological active substances, and achieve VIP customer customization.The above industrialization advantages of quality, cost, innovation and flexible customization have brought considerable incremental performance to the raw materials business.Based on the advantages in basic research and applied basic research, Huaxi biological raw material business can continuously empower raw material customers, increase customer stickiness and enhance competitiveness through the output of solutions and technical services.Guanchuan.com reporters learned that huaxi Biotechnology, which is now moving towards a platform company, is making a systematic layout of patents in order to continuously increase the competition barriers in the field of raw materials, and through the Huaxi Biological Research Institute to grant patents, trademarks, technologies and other aspects to empower the market and ultimately increase its own commercial premium.Based on this business strategy, Huaxi Biological will continue to connect with famous end-consumer customers including Jissbon, Wahaha, Yili and Bright Dairy in 2021 to further expand its own influence and brand power while upgrading the enabling industry.The author believes that if the raw material to B business wants to become bigger, it must transform from production to service and have the comprehensive solution capability of product, service and technology. Huaxi Biological is creating a sample of innovation enabling.Compared with other enterprises in the industry, Huaxi biological benchmarking benefit is significant.According to Frost Sullivan, the global hyaluronic acid raw material market will maintain a high compound growth rate of 14.9% in the next five years, and reach 1223.0 tons of market volume in 2025.Now, the proportion of production of pharmaceutical grade hyaluronic acid products in China is lower than the average proportion of all countries in the world, and there is a large room for improvement, which is obviously good for Huaxi Biological.Benefited from the domestic food grade HA policy, Huaxi biological with the advantage of the domestic sodium hyaluronate new resources of the application party and hyaluronic acid raw materials at home and abroad brand reputation, the company food grade HA domestic sales will further increase.”The company has been following the logic of science → technology → product → brand to achieve continuous innovation and profitability,” said Zhao.It is not hard to see that, as an important branch of “four-wheel drive”, the raw material business also follows the same development path, and this clear and enhanced drive will bring sufficient power for its future growth.This article is an exclusive article, shall not be reproduced without authorization.