Hair Transplant Track Heating Up

Xu Mengyi, researcher of the 21st century innovation capital research institute

In the era of "beauty economy", from the level of decoration and dressing up to the change of "essence", capital is also waiting for the opportunity. In recent years, a large number of companies have won the favor of capital, including beauty, health care, pets, etc.

However, with the increasing penetration rate of each segment, the profit margin of the market is also narrowing. In the new wave of consumption in recent years, can hair transplant industry emerge? Can an early hair transplant track become a new outlet for capital?

The market is heating up suddenly

According to the survey data of the National Health Commission in 2019, the number of hair loss in China exceeds 250 million, with an average of one in six people losing their hair, including 163 million men and 88 million women. Among them, the proportion of people who lost their hair before the age of 30 is as high as 84%, which is 20 years earlier than that of the previous generation.

However, in the huge population of hair loss in China, only a few have received the medical service of hair transplantation. According to public data, in 2020, there will be 516000 cases of hair transplantation in China, with a penetration rate of 0.21%. The market demand has not been fully met. Therefore, the market, which started in 1997, has been in a relatively small position for nearly 20 years.

The turning point was in 2013. Since then, large-scale chain organizations such as Yonghe hair transplant, biliansheng hair transplant and barley micro needle hair transplantation have emerged one after another. In the past two years, the hair transplant project has even suddenly become a "star topic".

As far as we can see, advertisements for hair transplants can be found everywhere“ "Top priority" is a big pain point for people with facial anxiety, which naturally breeds a huge hair business, and young people become the absolute main force in this "battle". According to the data, young people aged 20 to 30 account for 57.4% of the current population.

According to the "global hair transplant market report", the global market size of hair transplant will reach 23.88 billion US dollars (about 170.9 billion yuan) in 2023, and the compound annual growth rate will reach 24% in the next five years.

According to frost Sullivan's judgment, China's hair transplant medical service market will grow from 13.4 billion yuan in 2020 to 37.8 billion yuan in 2025, with a compound annual growth rate of 23%.

And keen capital is also planned ahead of time. In September 2017, Yonghe Medical Group Co., Ltd. (hereinafter referred to as "Yonghe hair transplant") received a capital injection of hundreds of millions of yuan from CITIC, which was the first time that capital entered the field of hair transplantation in mainland China. Yonghe hair transplant is positioned from a simple hair transplant hospital to an integrated service organization providing "hair transplantation, hair care and hair care".

At the beginning of 2018, biliansheng, another hair transplant agency established for more than ten years, also received a strategic investment of 500 million yuan from Huagai capital. It adopts the strategy of "one city, one store" direct chain operation, and puts its resources and energy into meeting the needs of users and tackling key technical problems, but its marketing investment is not high.

Recently, the person in charge of biliansheng disclosed in an interview with the 21st century economic report that biliansheng has set up 32 branches in key cities of China, such as Beijing, Shanghai and Shenzhen, serving more than 300000 fayous. Seven branches are to be opened this year, and will continue to expand to more than 100 branches in the next year, and will gradually sink to the third and fourth tier markets, creating a "moat" for the rapid development of enterprises.

And other hair transplant chain organizations are also groping for their own growth path. For example, the strategic layout of barley hair transplantation is in the aspect of internationalization. Since last year, it plans to add more than 20 barley micro needle hair transplant institutions overseas in three years, and cooperate with more than 10 first-class scientific research institutions and organizations in the world.

Marketing expenses and high cost of human resources

The "real gold and silver" has gradually entered the market, which shows the attitude of capital. However, there are still investors who compare entering the hair transplant industry to a huge gamble of VC / PE, "the chance of running with you is very great, but the income of the winner is immeasurable."

One of the concerns of investors is that behind the high gross profit margin, hair transplant agencies can not hide the fact that their net profits are low.

On the evening of June 17, Yonghe hair transplanting submitted its listing application to the main board of the Hong Kong stock exchange. According to the company's prospectus, the total revenue increased from RMB 934 million in 2018 to RMB 1.64 billion in 2020, and the gross profit margin remained above 70% for several years.

It is understood that the price of hair transplant surgery is calculated according to the hair follicle unit. According to the public data, the price of hair transplantation in China is from 10 yuan per unit. Under normal circumstances, consumers who need hair transplantation start from thousands of hair follicle units. Of course, according to the degree of hair loss, the number of hair follicle units required for hair transplantation also varies greatly.

However, after deducting other costs, the net interest rate of Yonghe hair transplant in 2020 is only 10%, and the net interest rate of the company in 2019 and 2018 is only 2.9% and 5.7%.

In contrast, the hair transplant departments in public / private hospitals are much more comfortable. According to a group of data disclosed by the industry, at present, the gross profit margin of hair transplant departments in public hospitals is as high as 60% to 70%, while that of private hospitals is 35% to 40%. Their gross profit margin is much higher than the average profit margin of 15% for listed medical and American institutions.

With many hot emerging brands facing the same problem, the ultra-high marketing costs and human resources costs encroach on the profit space. It is understood that the marketing expenses of hair transplant institutions account for 30% or more of the total cost, and the average human resource cost accounts for nearly 30% of the total cost.

In the view of investors, hair transplant projects are relatively standardized and the content of science and technology is not high, which means that the hair transplant industry is very suitable for diluting marketing investment through chain operation, and coping with the peak and valley changes of service volume through the scheduling of medical staff.

The operation principle of hair transplantation is not complicated, but considering how to make the postoperative effect more beautiful and natural, it has become a real technical work. Of course, the more hair follicle units to be transplanted, the more skilled and competent the doctor will be.

In addition, there are still a series of problems in the hair transplant track, such as the confusion of medical staff, the blind expansion of chain stores, and the serious shortage of professional hair transplant personnel.

(this paper is the result of the consumer service research of the industry investment and Financing Research Institute of the 21st century.)

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