Yonghe Medical Group Co., Ltd. (hereinafter referred to as 'Yonghe Medical') successfully went public on December 13, 2021, with a global issuance of 94,424,000 shares at a tender price of HK$15.80, raising approximately HK$1.492 billion.
During the Hong Kong listing process, Frost & Sullivan mainly undertook the following tasks: helping the company accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the company's competitive advantages, assisting the company, investment banks, and other intermediaries in completing relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), facilitating communication with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the company in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.
China hair service market
Hair medical services are a type of consumer healthcare service. The Chinese hair medical services market can be divided into the hair transplantation service market and the medical hair care service market based on whether surgery is performed. In 2020, the hair transplantation service market and the medical hair care service market accounted for 72.8% and 27.2% of the Chinese hair medical services market respectively.
The hair medical service market has seen significant growth since 2016. The market size increased from RMB 7.8 billion in 2016 to RMB 18.4 billion in 2020, with a compound annual growth rate of 23.9%. It is expected that by 2025 and 2030, the market size will further increase to RMB 562 billion and RMB 1381 billion respectively.
China hair transplantation medical service market
Hair transplantation is a relatively safe surgical procedure for solving hair-related problems. Hair transplantation needs to be performed at specialized medical institutions, such as the network of hair transplant medical institutions in China by Yonghe. Hair transplantation is a surgical procedure that extracts hair follicles from the posterior scalp area with high-quality follicles and transplants them to exposed and sparse hair areas. Compared to other non-transplanting hair health treatment methods, hair transplantation treatment has significant effects on hair loss, alopecia areata, and baldness. Considering the limited supply of practicing physicians in China and the strict regulatory environment, new entrants to the Chinese hair transplant medical service market will face challenges.
Hair loss is a major issue related to hair, and there is a high demand for treatments on the market. A survey by the National Health Commission shows that in 2020, the number of people with hair loss in China exceeded 2.5 million, including about 1.635 million men and about 886,000 women. Although certain local or even overall treatment methods can alleviate severe symptoms of hair loss, the recovery period for hair transplantation is relatively short, and the treatment effect is more noticeable. However, compared to the actual number of people suffering from hair loss in China, the number of people receiving hair transplantation services is relatively small. In 2020, only about 516,000 hair transplantation surgeries were performed in China, with an infiltration rate of only 0.21%, indicating that market demand has not been met. In addition, with the emergence of aesthetic hair transplantation, the expansion of hair transplantation options, and service innovation, it is expected that the customer base for hair transplantation in China will expand from patients with hair loss to more consumers seeking to improve their appearance through medical means, with great market growth potential for hair transplantation medical services in China. The market size of hair transplantation medical services in China was 134 billion yuan in 2020, and it is expected that by 2025, the market size will reach 378 billion yuan, with a compound annual growth rate of 23.0%. By 2030, the market size will further grow to 756 billion yuan, with a compound annual growth rate from 2025 to 2030 of 14.9%.
Market scale of hair transplantation medical services in China, 2016-2030E
Source: Frost & Sullivan report
Growth Drivers of the Hair Transplant Medical Service Market in China
The affordability of hair transplantation medical services is getting higher and higher.
In 2020, the per capita disposable income of Chinese residents increased to RMB 32,189, among which the per capita disposable income of urban residents in China reached RMB 43,834. The growth in disposable income has increased purchasing power, and thus the affordability of hair transplantation medical services has also improved.
The prevalence of hair-related issues
More and more people of different ages, genders, and occupations are troubled by hair-related issues. Severe hair problems such as baldness and follicular closure can only be effectively resolved through hair transplantation. However, the market penetration rate of hair transplantation medical services is as low as 0.21%, indicating a large unmet demand.
Consumer education investment continues to increase
With the expansion of the market, the marketing channels for hair transplantation among educational consumers are becoming increasingly diversified. Consumers will find it easier to obtain knowledge about hair transplantation, making them more likely to accept the treatment. This will help the public accept hair transplantation as a reliable solution to hair-related problems.
The development of hair transplantation technology
Technological advancements drive the market forward. From FUE to microneedle hair transplantation technology, the innovation in hair transplantation has made it possible for scalp trauma to be minimal, recovery quick, with good efficacy, high hair growth density after surgery, and natural hair growth direction.
Increase in the number of medical professionals practicing across multiple sites
With the implementation of the physician multi-site practice policy, physicians are allowed to practice at multiple locations, and more physicians can provide services at hair transplantation institutions, thereby accelerating the market's specialization and accessibility.
Future Trends of the Hair Transplant Medical Service Market in China
Rapid growth in consumer groups
Currently, with the enhancement of aesthetic standards and the rise in expectations and demands for appearance, Chinese male and female consumers have begun to pay attention to hair-related issues such as thinning hair and imperfect hairlines. This has contributed to expanding the consumer base.
Consumer education and brand awareness enhancement
Since hair transplantation services are a type of consumer healthcare service, long-term investment in consumer education is required. This continuous education ensures rapid growth in market size and penetration rates. As the market expands, its brand awareness and customer loyalty will also increase accordingly.
Penetration into lower-tier cities
China's lower-tier cities and rural areas are gradually becoming wealthy and urbanizing, making them increasingly able to afford higher-quality hair transplantation services. In addition, public medical resources in lower-tier cities are limited, and most public hospitals do not even provide hair transplantation services, which has further promoted the development of private hair transplantation institutions. Therefore, consumers in lower-tier cities have become the main target group for market participants. As hair transplantation service providers penetrate into lower-tier cities, chain hair transplantation institutions will gradually enter or even dominate the market of individual hair transplantation institutions.
Transparent and standardized hair transplantation services
As consumer awareness in the hair transplantation field continues to improve, the market has become more mature and regulated, thus requiring more standardized and transparent services.
Market segmentation
Due to varying hair loss levels among customers of different genders, ages, and regions, specific hair transplantation plans need to be adjusted accordingly. As customers' aesthetic awareness improves and their expectations and demands for service quality rise, more consumers prefer personalized hair transplantation over traditional treatment. It is expected that the development of personalized hair transplantation will become a new trend.
One-stop comprehensive hair management service
The hair transplantation medical service market shows a trend towards development from hair transplantation medical institutions to one-stop comprehensive hair management medical institutions. This means that all hair treatment needs can be met within the one-stop services of a single medical institution. This is mainly due to: (i) Hair-related issues are complex and require professional diagnosis and different treatment plans. Comprehensive hair management medical institutions can meet consumers' diverse needs, including all hair-related issues, not just hair loss; (ii) To eradicate hair-related issues, a comprehensive treatment plan that combines different treatment plans is needed to maintain and enhance the effect; and (iii) To achieve the best treatment effect, it is crucial to select the most suitable treatment combination from a wide range of hair-related treatment options, including medications, professional or medical equipment, possible surgeries, and hair nourishing products. Only one-stop comprehensive hair management medical institutions can meet all these requirements.
Participation and Competitive Landscape of the Hair Transplant Medical Service Market in China
China offers a wide range of medical institutions providing hair transplantation services, including public hospitals (hair transplant departments) and private medical institutions (including chain hair transplant clinics, individual hair transplant clinics, and beauty salons with hair transplant departments). Public hospitals in China rarely perform hair transplants, leading to an enormous and rapidly growing demand among Chinese patients for hair transplantation that cannot be met. In contrast, private medical institutions, with their rich experience in hair transplant surgeries, are more capable of meeting this unmet medical need, thus having great growth potential. In addition, compared to individual hair transplant clinics, the quality of hair transplantation services provided by hair transplant chain institutions is more guaranteed, making them favored by potential patients.
Main Participants and Market Share of China's Hair Transplant Medical Service Market in 2020
Source: Frost & Sullivan report
China's medical and elderly care service market
Medical and cosmetological services generally refer to non-surgical treatments provided by licensed medical institutions to solve various scalp and hair problems, such as hair loss, thin and soft hair, scalp itching, and oily scalp. In 2020, the overall market size reached 5 billion yuan, with a compound annual growth rate of 25.4% from 2016 to 2020. It is expected that from 2020 to 2025, the market size of medical and cosmetological services in China will grow at a compound annual growth rate of 29.8%, reaching 625 billion yuan by 2030.
Market size of healthcare and elderly care services in China, 2016-2030E
Source: Frost & Sullivan report
Characteristics of China's medical and elderly care service market
High repurchase rate and customer stickiness
Customers tend to choose healthcare and wellness service brands they have visited before and trust, as these services are related to healthcare and often require regular treatment to achieve and maintain efficacy. In the long run, healthcare and wellness service providers with a brand reputation or that can offer professional services will gain customer trust and preference. High repurchase rates help increase consumer loyalty.
A huge potential patient base
Medical and hair restoration services can meet the treatment needs of patients at different stages of hair loss, taking into account both female and male patients of different ages. Therefore, medical and hair restoration services are expected to be suitable for a large number of potential patient groups.
An important supplement to the hair transplantation medical service market
Medical and hair care services play a crucial role in hair transplantation medical services. These services provide important pre- and post-operative supplements for hair transplantation medical care and offer long-term maintenance plans for patients with varying degrees of hair-related issues.
Frost & Sullivan, integrating 60 years of global consulting experience, has dedicated 23 years to serving the booming Chinese market with a global perspective. We help clients accelerate their business growth by achieving industry growth, innovation, and leading benchmarks. The healthcare industry is one of the core areas of focus for Frost & Sullivan. Over the past sixteen years, the Frost & Sullivan healthcare team has provided financing and financial advisory services, IPO industry advice, strategic consulting, management consulting, and other services to hundreds of outstanding domestic and international biopharmaceutical, medical device, healthcare services, and internet healthcare companies. Successful listings include: Kailaiying (6821.HK), Beihai Kangcheng (1228.HK), Gushengtang (2273.HK), Yingtong Technology (2251.HK), Clover Biotech (2197.HK), Minimally Invasive Robotics (2252.HK), Huiyuan Kaiman (2256.HK), Kunbo Medical (2216.HK), Xianruida (6669.HK), Kangsheng Global (9960.HK), Yimaitong (2192.HK), Tengsheng BOPY (2137.HK), Canopy (2162.HK), Chaoyu Ophthalmology (2219.HK), Guichuang Tongqiao (2190.HK), Huihuang Medicine (0013.HK), Koi Pharmaceutical (2171.HK), Zhaoke Ophthalmology (6622.HK), Nature Pharma (UPC.NASDAQ), Sain Bio (6600.HK), Zhaoyan New Drugs (6127.HK), Novogene Health (6606.HK), Tianyan Pharmaceutical (ADAG.NASDAQ), Beikang Medical (2170.HK), Jianbimiao Miao (2161.HK), Minimally Invasive Heart Center (2160.HK), Ruirimi Medical Beauty (2135.HK), Jiake Pharmaceutical (1167.HK), Hepo Pharma (2142.HK), JD Health (6618.HK), Deqi Pharmaceutical (6996.HK), Rongchang Biotech (9995.HK), WuXi AppTec (2126.HK), Sono Biotech (2096.HK), Yunding Newray (1952.HK), Jiahe Biotech (6998.HK), Zai Ding Pharmaceutical (9688.HK), Ocular Therapeutics (1477.HK), Yongtai Biotech (6978.HK), Haipure Pharmaceutical (9989.HK), Kepower Pharmaceutical (9939.HK), Peijia Medical (9996.HK), Kangfang Biotech (9926.HK), Nuo Cheng Jianhua (9969.HK), IMAB.NASDAQ, Kanglong Chemical (3759.HK), China Antibody (3681.HK), Dongyao Pharmaceutical (1875.HK), Yasheng Medicine (6855.HK), Fuhong Hanlin (2696.HK), Hansoh Pharmaceutical (3692.HK), Mabotech (2181.HK), Fangda Holdings (1521.HK), Via Biotech (1873.HK), Cornerstone Pharmaceuticals (2616.HK), Junshi Biosciences (1877.HK), WuXi AppTec (2359.HK), Xinda Biotech (1801.HK), Hualing Medicine (2552.HK), BeiGene (6160.HK), Gilead Sciences (1672.HK), WuXi AppTec (2269.HK), China Resources Medicine (3320.HK), Jacobus Buchen Scientific Research Pharmaceutical (2633.HK), Huihuang China Medicine (HCM.NASDAQ), GSK Biologics (1548.HK), BBI Life Sciences (1035.HK), etc. In terms of the number of filings, the Frost & Sullivan healthcare team maintains an absolute leading position in Hong Kong's healthcare IPO market, continuously occupying more than 90% of the market share from 2018 to 2020.
Since the listing of the first batch of companies on the Sci-tech Innovation Board in July 2019, Frost & Sullivan reports have been widely cited in the prospectuses of leading Sci-tech Innovation Board listed companies, including: Dizhi Medicine (688192.SH), Novogene (688105.SH), Chengda Biology (688739.SH), Geke Micro (688728.SH), Huaxi Biology (688363.SH), Junshi Biology (688180.SH), Zhejiang Genomics & Biotechnology Co., Ltd. (688266.SH), Beiogen (688177.SH), Shenzhou Cells (688520.SH), etc. They are considered the most powerful, professional, and influential industry research institutions in the industry. We hope to work with enterprises to understand industry trends, seize development opportunities, jointly promote innovation and upgrading of China's health industry, and build a healthy future.
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