First, the development process of China’s medical beauty industry
According to Article 2 of the Measures for the Administration of Medical Beauty Services, medical beauty refers to the repair and reshaping of human appearance and the morphology of various parts of the human body by surgery, drugs, medical devices and other traumatic or invasive medical techniques. Medical beauty is divided into surgical and non-surgical medical beauty according to whether surgery is needed, which are all carried out by registered professional doctors and medical experts.
Compared with the United States, South Korea and other big countries, China’s medical beauty industry started late, and its development process can be roughly divided into three stages:

Figure 1: The development course of China’s medical beauty industry
According to public information
From 1949 to 2008, marked by the establishment of plastic surgery for the first time, the domestic medical beauty industry began to sprout. In 1949, plastic surgery was established for the first time in China, which marked the germination of medical beauty industry in China. Since then, many public hospitals have set up plastic surgery departments, such as the Plastic Surgery Hospital of China Medical College. During this period, the main demand for medical beauty comes from passive plastic surgery such as post-injury repair and correction.
2008-2014 was the initial stage of the industry, and the upstream raw material manufacturers developed well, which led to the emergence of private medical institutions. This stage has three characteristics. First, a number of related companies are listed or listed, such as the listing of Huaxi Bio in Hong Kong in 2008 and the establishment of Huahan Plastic in 2010. Second, industry integration and mergers and acquisitions are frequent, and Langzi, suning universal and Fosun all deploy the medical and beauty industry through mergers and acquisitions; Third, the cooperation between China and South Korea has been further deepened, with Langzi and Evergrande as the representatives, and Korean technology and doctors have been continuously introduced and promoted.
Since 2014, with the help of capital, the industry has prospered and developed, and the "internet plus" wave has given birth to the Internet medical beauty platform. Driven by the mobile Internet and consumption upgrading, the Internet medical beauty platform has developed and gradually become the hub of the medical beauty industry chain. Since 2014, Internet medical beauty platforms such as New Oxygen, More Beauty and Yuemei.com have been favored by the capital market and have won several rounds of financing.
Second, the general situation of medical beauty industry chain
According to the relationship between the upstream and downstream of medical beauty products from manufacturing to serving consumers, the medical beauty industry chain can be divided into upstream raw material equipment manufacturers and downstream medical beauty institutions. The upstream raw material equipment, including instruments and equipment, injections and auxiliary materials, reach downstream private or public institutions through direct sales or consignment by manufacturers to provide corresponding services for medical beauty consumers. In addition, with the development of Internet technology and the penetration of consumer groups, the Internet medical beauty platform helps upstream manufacturers simplify distribution links by linking medical beauty institutions, and on the other hand, it can help consumers make efficient decisions. Related service providers include medical beauty industry information service providers, medical beauty APP, medical beauty insurance and so on.

Figure 2: Medical Beauty Industry Chain, compiled and drawn by the author.
Third, the status quo of China’s medical beauty industry
With the improvement of economic conditions, the continuous improvement of living standards, and at the same time, China consumers are influenced by the new trend of international medical beauty, and their awareness of medical beauty consumption is gradually awakening, and the medical beauty market is showing a rapid development trend. In 2019, the medical beauty market in China reached 176.9 billion yuan, and the CAGR was 28.54% in 2015-2019, which was higher than the same period in the world.

Figure 3: Global and China Medical and Beauty Industry Market Scale in 2015-2019
Source: Lemon Aimei, iResearch, etc.
1. Upstream: the overall concentration of raw materials and equipment is relatively high, and the domestic substitution is accelerated.
Medical cosmetology can be divided into surgical category (plastic surgery) and non-surgical category (Light medical cosmetology), in which the market capacity of Light medical cosmetology, China has steadily expanded, accounting for a stable proportion of the overall medical beauty market. Surgical medical beauty projects include eyelid plastic surgery, nose plastic surgery, oral orthodontics, hair transplantation and other head and face projects, breast enhancement and other chest projects, as well as liposuction and other physical projects. Non-surgical medical beauty projects include injection projects such as botulinum toxin and hyaluronic acid, facial rejuvenation projects such as photon rejuvenation, and other projects such as tooth beauty. China’s Light medical cosmetology market accounts for a much higher proportion of the overall medical beauty market than the surgical cosmetic plastic surgery market, and has been stable at around 65%-70% in recent years. In 2018, the market size of China Light medical cosmetology was 102.8 billion yuan, a year-on-year increase of 30.62%; In 2019, the market size of China Light medical cosmetology was 119.1 billion yuan, a year-on-year increase of 15.86%.
Table 1: Classification of Medical Beauty Projects

According to public information

Figure 4: The market scale of China Light medical cosmetology accounts for a high proportion of the overall medical beauty project scale.
Source: iResearch.

Figure 5: China Light medical cosmetology market size
Source: iResearch.
In terms of raw materials in Light medical cosmetology, hyaluronic acid and botulinum toxin are the main injection fillers. According to ISAPS data, the plastic surgery projects using botulinum toxin and hyaluronic acid reached 5.03 million and 3.3 million respectively, accounting for a total of 66%. According to the new oxygen big data, hyaluronic acid and botulinum toxin accounted for 66.59% and 32.67% respectively, accounting for a total of 99.26%.

Figure 6: Distribution of Injection Medicine Beauty in China
Source: New Oxygen Big Data
Upstream products have high technical barriers and strict listing approval, resulting in a high concentration of upstream manufacturers. In China, it takes 3-5 years to get the certificate of hyaluronic acid class III medical devices, and it takes 5-8 years to get the registration certificate of botulinum toxin drugs. Therefore, the upstream medical machinery link in the United States has a high moat advantage with strict policies and technical barriers. Up to now, a total of 16 enterprises in China’s mainland market have the registration certificate of hyaluronic acid class III medical devices issued by NMPA, while only 4 enterprises have the registration certificate of botulinum toxin biological drugs, of which only one is domestic.
Table 2: List of Domestic Approved Hyaluronic Acid and Botulinum Toxin Products

Source: NMPA, flint creation
Hyaluronic acid (commonly known as hyaluronic acid) is a kind of natural macromolecular mucopolysaccharide with N- acetylglucosamine and D- glucuronic acid as structural units, which widely exists in vertebrate connective tissues and body fluids, and has unique viscoelasticity and excellent water retention properties. At present, medical grade hyaluronic acid terminal products mainly cover three application fields: medical beauty, orthopedic treatment and ophthalmic treatment. In 2018, the medical beauty market was larger than other application fields, reaching 3.70 billion yuan, and the growth rate was higher than other fields, with a compound growth rate of 32.3% from 2014 to 2018. In 2020, it is estimated that the market scale of medical beauty hyaluronic acid terminal products in China will reach 4.82 billion yuan.

Figure 7: Market size of medical-grade hyaluronic acid end products in China (100 million yuan)
Source: Frost & Suliivan
China’s hyaluronic acid market is dominated by imports, and there is a large room for domestic substitution. At present, there are more than 20 kinds of hyaluronic acid products subdivided by National Medical Products Administration (NMPA). In terms of sales, the top four companies in the hyaluronic acid market are all foreign-funded enterprises, accounting for 68% of the total in 2019, and imported products dominate. In terms of sales volume, the sales volume of domestic hyaluronic acid has exceeded 40% in 2018, and domestic brands have gradually emerged. With the continuous improvement of cross-linking method and production technology of domestic hyaluronic acid products, the gap between domestic products and imported products in terms of concentration, degree of cross-linking, particle size, hardness and cohesiveness is gradually narrowing, and the domestic substitution process of hyaluronic acid will be deepened.

Figure 8: China Medical Beauty HA Product Sales Ranking in 2019
Source: Frost & Suliivan

Figure 9: Sales ranking of HA products of China Medical Beauty in 2018
Source: Frost & Suliivan
Botulinum toxin (commonly known as botulinum toxin): It is a toxic protein secreted by botulinum in the process of reproduction and has strong neurotoxicity. Botulinum toxin, as a nerve agent, can inhibit the release of acetylcholine from nerve endings by irreversibly cutting the neurotransmitter conduction complex, thus causing muscle relaxation and paralysis. However, its biggest application scenario is not in the medical field, but for medical beauty needs such as dynamic wrinkle correction, face-lifting and stovepipe. The overall market scale of botulinum toxin in China is in the stage of rapid growth. According to Limu Information Consulting, the market scale of botulinum toxin sold through formal channels in China has accelerated since 2015, reaching 3.92 billion yuan in 2018, a year-on-year increase of 32%.
Because the product is highly toxic, it is strictly regulated by the state. At present, there are only four official certifications in China (Hengli made in China, BOTOX imported from the United States, Dysport made by Ipsen in Britain and Letty Bo developed by Hugel in Korea). There are still seven botulinum toxin products in the process of applying for qualification. Looking around the world, the United States is the dominant company, Korean botulinum toxin producers all have the layout in China, and other manufacturers are researching botulinum toxin products, and Britain, Germany, Russia and India all have product layouts.
Laser beauty equipment: There are many kinds of equipment in the medical beauty equipment market, among which laser beauty equipment achieves the effect of plastic surgery through "light intervention" and becomes the backbone of the beauty medical market. Laser beauty instrument can be used in the fields of skin softening, nevus removal, wrinkle removal, hair removal and so on. According to public information, China’s laser beauty instrument market has developed rapidly. In 2019, the market scale was 2.84 billion yuan, a year-on-year increase of 19.73%.
Laser beauty instrument depends on imports, and domestic products are gradually recognized in the market. Although there are many laser medical beauty equipment enterprises in China, the mainstream equipment is mostly imported products. In the photoelectric equipment industry, foreign giants and local dominant enterprises are relatively mature, and the industry concentration is high. At present, the common suppliers of imported laser medical equipment include Alma in Israel, Lumenis in the United States, and Cynosure in the United States, accounting for 80% of the regular equipment and occupying a dominant position. The domestic medical and beauty equipment industry started late, and the technical foundation of enterprises is relatively weak. Domestic laser medical beauty enterprises have continuously enhanced their R&D capabilities, improved product quality, and gradually increased their market share through extension investment, mergers and acquisitions, and independent research and development. In terms of specific products, Wuhan Qizhi Laser’s photon therapeutic instrument and semiconductor laser depilation instrument, Shenzhen Peninsula Medical acne therapeutic instrument, Shenzhen GSD’s multi-element rf beauty instrument and other products are gradually recognized in the market.
2. Downstream: the entry barrier of cosmetic and plastic surgery hospital industry is low, and the distribution is unbalanced; The trend of "internet plus" is expected to reconstruct the ecology of medical beauty industry.
At present, in the market of medical beauty hospitals in China, service terminals are mainly divided into public plastic surgery hospitals and private beauty hospitals. Generally speaking, private specialized beauty hospitals and their clinics occupy most of the market space. However, due to the concentration of top experts, scholars and surgeons in the industry, the most advanced medical beauty resources and technologies in China, standardized management and high trust, public hospitals are still a very important part of the domestic medical beauty industry. In the future, with the advancement of medical reform, public hospitals are expected to regain their vitality in the market competition of medical beauty and jointly promote the rapid development of China’s beauty industry with private capital.
At present, medical and aesthetic institutions and professionals are mainly concentrated in the developed areas in the east. Although the market coverage has been extended to the central cities in the central and western regions, the market space of the second, third and third tier cities in the central and western regions with greater market breadth is still blank, and there is still a lack of channels for product promotion and business expansion, and it will take time to expand downward. On the whole, China’s medical beauty market has formed a layout with Beijing, Shanghai, Nanjing, Guangzhou, Hangzhou, Shenzhen, Wuhan, Changsha, Chongqing and Chengdu as the center of gravity, which can be roughly divided into four sectors: East China, North China, South China, Central China and West China, among which North China, East China and South China account for the vast majority.

Figure 10: Regional Distribution of China’s Medical Beauty Market
According to public information
Open up the relationship between medical and aesthetic institutions and consumers, and the Internet platform is expected to lead the reform of medical and aesthetic institutions. The main problem faced by private beauty hospitals is the high cost of sales and customer acquisition, and consumers are also faced with the embarrassment of asymmetric supply and demand information of medical beauty. The medical beauty APP platform mainly gathers users through the form of content+community+e-commerce or appointment referral, and builds a bridge for communication between B-end institutions, doctors and C-end customers, which improves the decision-making efficiency of users and reduces the marketing cost of institutions. From 2011 to now, dozens of medical beauty apps such as New Oxygen, Yuemei and Meituan Medical Beauty have emerged. Medical beauty App has purified the industry to a certain extent, promoted the medical beauty industry to transparency and standardization, and to some extent disintegrated the phenomenon of using the information of buyers and sellers to collect fees unequally. However, from the current point of view, the relevant medical beauty apps have not found a sustainable and stable profit model, and they still focus on business exploration in the short term.
Fourth, the future development prospects
At present, China’s medical beauty market is in the process of rapid development, and it faces the following outstanding problems: (1) The market is chaotic: raw materials and drugs of medical beauty are chaotic, and there are over-packaging of items and over-consumption of drugs; (2) The industry concentration is very low: the market share of head enterprises can only reach about 5%, and most of the markets are concentrated in some enterprises in the middle and long tail; (3) Medical resources can’t meet the demand: experts such as doctors and nurses, as well as hospital management talents are in short supply. With the rapid expansion of the medical beauty market, the medical resources in the industry will become more and more tense; (4) The supervision of the industry is still lacking: many medical and aesthetic supervision systems and policies are still in the process of exploration and improvement.
Since 2002, China’s supervision of medical beauty industry has become increasingly strict. The state has successively promulgated the management methods, institutional standards and classified management catalogue of medical beauty services, and promulgated the evaluation standards and detailed rules of medical beauty institutions. In 2016, China Plastic Surgery Association was established, and medical beauty service institutions officially entered the era of compliance. In 2020, eight ministries and commissions, including the Health and Health Commission, jointly issued the Notice on Further Strengthening the Comprehensive Supervision and Law Enforcement of Medical Beauty to crack down on illegal medical cosmetology and further rectify the medical beauty industry. With the increase of non-surgical items in the beauty market and the popularity of injection filling items, consumers’ complaints about after-sales service, quality and contract of medical beauty institutions have increased. Relevant departments should supervise medical beauty services and drugs in a targeted manner according to the development trend of the industry market, further promote the structural reform of the medical beauty industry, and improve the bad phenomenon of regaining customer marketing and neglecting professional medical care in the industry.
Table 3: Supervision Policy of Medical Beauty Industry in China

According to public information
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In the wave of "Yan value economy", everyone has a love of beauty, and the increase of per capita disposable income is an important factor to quickly enlarge the "love of beauty". In the medical and beauty industry chain, the domestic substitution of upstream raw materials and equipment has accelerated, while the downstream industries are more chaotic. However, the trend of "internet plus" is expected to reconstruct the ecology of medical beauty industry. At the same time, the state has issued a series of policies to continuously guide the industry to develop in a standardized and healthy way, and drive the industry to develop healthily.
* Disclaimer: This article is an original article for Flint, written by Xin Mingyu, and may not be reproduced without authorization.