The consumer healthcare industry chain is mature, with the upstream, midstream and downstream closely linked and mutually reinforcing. In the consumer healthcare industry chain, upstream are manufacturers of pharmaceuticals, consumables and medical equipment, which have high licensing and technical barriers, while midstream are public and private healthcare institutions, which are closely connected to consumers. Exposure and traffic, and interdependence with the midstream closely linked. The medical and health care market has undergone tremendous changes, with increasing demand for medicines, medical devices and medical services in all areas, and the pace of innovation in its business model and industrial integration is accelerating. In the downstream of the industry of consumer healthcare, the era of medical intelligence has opened up and new industries such as big data, precision medicine and medical robotics are gradually becoming a kind of emerging industry for the benefit of public health.

Consumer healthcare has a stable source of customers and high profit margins, providing companies in this industry with a certain level of risk resistance and the ability to continue operating. As the overall economic level of the world’s population rises. Consumer Healthcare has experienced solid growth and significantly increased profitability. The consumer medical sector combines the two main attributes of consumption and medical care, both rigid demand for health and the elasticity of upgraded consumption, and the growth and robustness of the sector’s performance is outstanding. From the analysis of the current listed medical device financial reports, the company’s benchmark biotechnology sector gross margin has long been stable above 60%, net margin at 20%-25%; downstream terminal institutions corresponding to specialty hospitals gross margin are higher than 35%, net margin at about 10%.

In the upstream of the consumer medical industry, the research and production barriers support high gross and net margins. At present, companies in the upstream of consumer healthcare are mainly concentrated in three areas: medical aesthetics, professional medical devices and healthcare products. For companies developing medical aesthetic and professional medical devices, research and capital investment and a strict approval process on a global scale are the moats for survival. From a product expansion perspective, there is ample room for iterations of medical aesthetic devices in terms of new material upgrades and indication extensions, and high margins and product pipeline reserves enable strong growth. Dental, ophthalmology and other specialist medical upstream strong technology to promote research and development and production, R & D investment to lead the industry, product power requirements under the production and manufacturing links are relatively high, medical device development and clinical cycle is long. Health care products cover a full range of functions, product extension to follow the application scenario rich broadening, a variety of materials can be developed around sports nutrition, medical health, beauty care, weight loss and shaping and other needs of a diversified product portfolio. There are relatively few barriers to the production of health care products, and the short cycle of product development empowers the terminal to iterate on new generations, but requires the company to have the ability to sell in the consumer side of the model and branding marketing.

For the downstream of the industry, product reputation and institutional awareness can be a moat for companies. The pharmaceutical industry is a capital-intensive and technology-intensive industry with high barriers to entry, and therefore has a greater competitive advantage. Specialist medical clinics, represented by assisted reproduction, ophthalmology and dental hospitals, have high barriers to entry in terms of licenses, capital and equipment, with average labor costs accounting for over 20% of the operating period, a long climbing cycle for single shops in an asset-heavy model, and relatively weak replication capabilities in other locations. However, with high barriers to entry and product power, the competitive landscape is of a higher quality. Leading institutions can broaden their service reach with a graded management model, and build a profitable moat with technological advantages, boosted by chaotization and regionalization.

By JIN Kaiwei