Sinolink: Commercialization of collagen recombination accelerates, China's ingredients enter a "golden age."

Sinolink released a research report stating that the production of recombinant collagen peptides and single chains has been realized, and commercialization has been initiated in the fields of skincare (cosmetic industry), water light therapy (Class III medical devices), scalp anti-aging (Class II medical devices), and intimate health (Class II medical devices). Recombinant collagen protein technology has made certain breakthroughs, with the skincare and medical beauty sectors having the fastest commercialization speed and considerable profit margins in the short term. In the medium to long term, it is optimistic about mid-tier manufacturers with excellent research and development capabilities, a rich pipeline of products, and the potential to be the first to obtain Class III medical device approvals. It recommends GIANT BIOGENE (02367), Jinbo Biological (832982.BJ), Guangdong Marubi Biotechnology (603983.SH), and JiangSu Wuzhong Pharmaceutical Development (600200.SH). Sinolink's views are as follows: Industry overview: Collagen protein has superior properties, and recombinant technology unveils the golden age. Collagen protein has effects such as promoting tissue repair and regeneration, antioxidant properties (clearing free radicals), whitening, and hemostasis. Preparation technology initially developed in the 1980s in the United States through animal extraction, and recombinant technology was first achieved by Dr. Fan Daodi of Northwest University in China in 2000, with mass production achieved in 2006. Commercialization started in skincare in 2009 and in medical beauty in 2021. Recombinant collagen protein vs. animal source: 1) Characteristics: Recombinant collagen has better water solubility, lower immunogenicity, no viral risk, stronger consistency in quality, further processing optimization, and higher denaturation temperature. In some scenarios, it has stronger biological activity. 2) Structure: Animal sources retain the triple helix structure, while the recombinant collagen protein's triple helix structure technology is still to be developed. 3) Cost: The price of recombinant collagen raw materials is 100,000 to 200,000 CNY per kilogram, while animal source implant-grade collagen costs 450,000 CNY per kilogram. With its superior properties, recombinant collagen has the potential to surpass animal sources. In 2021, China's professional skincare and medical beauty market retail sales reached 4.1 billion and 3.3 billion CNY, respectively. Development path: Leading in skincare, starting in medical beauty, great potential in the field of biomaterials and tissue engineering. Referring to the development path of hyaluronic acid, it went through animal extraction, biological fermentation extraction (with the factory price of injectable-grade hyaluronic acid raw materials at 110,000 CNY per kilogram in 2018), and cross-linking technology, with the application scope continuously expanding. According to Sullivan, in 2021, China's hyaluronic acid skincare market (including dressings) reached retail sales of 19.3 billion CNY and has relatively matured. The retail sales of hyaluronic acid medical beauty fillers reached 21.7 billion CNY, with factory sales calibre at 6.3 billion CNY. From 2022 to 2030, the compound growth rate is expected to reach 24% and the market size will reach 44.3 billion CNY. Currently, the production of recombinant collagen peptides and single chains has been realized, and commercialization has started in skincare (cosmetic industry), water light therapy (Class III medical devices), scalp anti-aging (Class II medical devices), and intimate health (Class II medical devices). From 2017 to 2021, the retail sales of recombinant collagen skincare and medical dressings reached 4.6 billion and 4.8 billion CNY, respectively, with compound annual growth rates of 52.8% and 92.2%. In the future, after further breakthroughs in technology such as triple helix, quaternary structure, and self-crosslinking, recombinant collagen is expected to further expand into applications such as filling and regenerative materials. Space calculation: Recombinant collagen in the medical beauty facial anti-aging and intimate anti-aging markets. Facial anti-aging: Collagen protein's properties fit the multiple needs of Chinese consumers (whitening+anti-aging, natural effects), and it is expected to become an important material in medical beauty water light therapy, eye rejuvenation, and filling. The peak of recombinant collagen implantable products in Class III devices is expected to be reached in 2024-2025. Under neutral assumptions, the market size of recombinant collagen water light therapy, eye rejuvenation, and facial filling is expected to reach 6.6 billion, 3.3 billion, and 300 million CNY in 2025, and 9.2 billion, 6.2 billion, and 7 billion CNY in 2030. Intimate anti-aging: Under neutral assumptions (user penetration rate of 1%), the market size of recombinant collagen in the field of vaginal relaxation treatment is expected to reach 7 billion CNY in 2030. Related companies: Currently, leading companies have generally achieved breakthroughs in Type I/II/III/XVII humanized secondary structure and are focusing on multiple models+full-length+triple helix. Leading companies operate in a more integrated manner, driving downstream commercialization with their own fermentation technology. 1) GIANT BIOGENE: It reserves three full-length (Type I/II/III), 25 enhanced function types, and five functional fragment recombinant collagen proteins. It owns a strong presence in the skincare sector and has four medical beauty products in development (expected to obtain certifications in 2024 and 2025). 2) Jinbo Biological: It has achieved an independent functional region with a 164.88 triple helix structure of Type III collagen protein and holds the only two Class III certificates. It develops products in the fields of gynecology, obstetrics, surgery, and orthopedics using recombinant Type III, Type I, and Type XVII human collagen proteins. 3) JiangSu WuZhong Pharmaceutical Development: It collaborates with overseas companies and DongWan Biopharmaceutical Co., Ltd., and introduces trimer and triple helix technologies. 4) Guangdong Marubi Biotechnology: Its "recombinant dual-collagen" has three advantages: hybridization of Type I and Type III, C-pro peptide ring triple helix structure, and translation pause patent technology. It assists its main brand in rejuvenation. It has launched two Class II products and will focus on water light therapy, filling, and tissue material fields in the future. 5) Bloomage Biotechnology Corporation Limited (688363.SH): It has dual development in animal source and recombinant collagen proteins. Recombinant Type III human collagen protein raw material products have been launched. 6) Lushang Freda Pharmaceutical (600223.SH): It collaborates with Hebei Naco and focuses on recombinant Type III collagen protein. 7) Chuangjian Medical: It has a complete industrial chain layout of raw materials, OEM, and medical beauty skincare. It produces recombinant Type I, II, III, and XVII collagens on a large scale. 8) Tongling Jieya Biologic Technology (301108.SZ): It collaborates with Chuangjian Medical to develop medical dressings. Risks: Unexpected delays in technological development, industrialization progress, and product approval process, as well as potential improper marketing of downstream customers.Risks of reputational damage caused by medical accidents.