🤑 The Billion-Dollar Acid
A compound commonly found in the human body has made two women billionaires. Here's how.
What if we told you that a chemical compound normally found within your body can make you a billionaire? Sounds unreal?
It's not. This compound that is commonly found in your eyes and your skin has made not one but two women in China billionaires. In fact, one of these two women has built an $11 billion empire!Â
The Billion-Dollar Beauty Secret
Hyaluronic acid (let’s call it HA), the billionaire compound, is literally in every skincare product nowadays. It is like the oil of the beauty industry. Don't believe us? You can look up the ingredients of the moisturiser that you use.Â
Wondering why this ingredient is so popular? Because it promises to hydrate and nourish your skin, improve skin tone and texture, plump up wrinkles and many other benefits. A slightly different variation of HA called sodium hyaluronate is even present in your eye drops. It is also increasingly being used in beauty treatments as fillers. And why just beauty. It is also used to treat serious ailments like osteoarthritis.Â
So, you can well understand how important HA is. Everybody wants a piece of it.Â
And China has identified this need. Probably, much before the rest of the world. This is why it is currently the lead supplier of HA in the world, accounting for 80% of world supplies. Chinese companies like Bloomage and IMeik are the world's largest producers of HA, with half the world's supply coming from Bloomage alone.Â
This is yet another race that China is winning. And why not. China's market for skin treatments is set to reach $48 billion soon. But what is China's secret sauce that has made it the number one supplier of this very coveted acid?
Tech is the Key
China has several major tech companies, many of which just focus on specific micro industries and their barriers. This is the reason behind China's success.
For instance, hyaluronic acid production in the rest of the world is very expensive because it is produced through a special process called microbial fermentation. But Chinese companies have developed some newer technologies that have made this process cheaper and more productive.
Because of this new tech and special fermenters, a Chinese company Bloomage Biotechnology has been able to increase the amount of HA it can extract from the base solution. Earlier it could only produce 3 grams per litre of the solution but now this level has reached a world-best of 12-14 grams per litre. And this groundbreaking tech has helped create an $11 billion empire for Bloomage's chairwoman Zhao Yan. The company earned a revenue of $97 million in 2020 and share prices have increased 5 times since its 2019 IPO.
Chinese company IMeik Technology Development Co. has also had tremendous success in the HA business, with its chairwoman Jian Jun amassing money faster than any other Asian entrepreneur. She is worth $5.2 billion.Â
But for these enterprising women, the sky's the limit. And so they're constantly innovating and experimenting.
IMeik is developing a botox like product with HA that will help prevent and treat wrinkles.Â
But Bloomage is a little more ambitious. The company is now tired of working behind the scenes and wants to take over the skincare industry. So, it is aggressively marketing its in-house skincare brand Biohyalux.Â
The brand may already have an upper hand in the Chinese market, where customers are increasingly choosing homegrown products now. But it will also have an advantage when it launches in international markets: cheap prices, something that Chinese companies are capable of.
Since Bloomage controls the HA production and supply it can afford to sell its HA-based products at a much lower price. Its products right now are up to 60% cheaper than other similar skincare products available. This may convince a lot of consumers to switch brands.
But that's not all. Bloomage wants to introduce the already ubiquitous HA into even more products. Last year, it understood the pulse of the market and introduced hand sanitisers which would soothe hands that were chapped after excessive use. And after China approved HA as a food ingredient, it also launched HA-based bottled water and HA-based chewy candies.
However, the skincare industry is kind of like the stock market. And the popularity of HA right now could very well be a bubble. You see, new "miracle" ingredients pop up in the industry every few years. And the next must-have ingredient could erode HA's popularity. While HA definitely won't disappear off the shelves, people probably will stop buying anything and everything that features the acid.
So, is Bloomage's plan sustainable? Or will the company face a massive blow when the next magic ingredient is discovered?
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