A report from CITIC SEC indicates that despite facing headwinds such as weak demand and a temporary rebound in market share for international brands, the operational quality of the cosmetics industry showed positive changes in 2025. Companies have clarified their market positioning, further solidified the scale and consumer recognition of their hero products and series, and generally achieved breakthroughs in category expansion. Technological upgrades, scenario extensions, and shifting trends are expected to make 2026 a significant year for new product launches, with clear growth drivers on the product side. The medical aesthetics industry is currently in a phase of rapid increase in upstream product registrations, leading to intense competition, yet structural opportunities remain. Upstream brands with strong comprehensive capabilities in marketing, customer acquisition, medical promotion, product portfolio management, and channel operations are likely to succeed. The main points from CITIC SEC are as follows:
Review of Cosmetics in 2025: Top-performing companies achieved rapid growth, and industry divergence continued. According to National Bureau of Statistics data, retail sales of cosmetics from enterprises above a designated size increased by 5.1% year-on-year in 2025 and by 5.9% year-on-year in Q1 2026, maintaining steady growth. At the company level, revenue for Lin Qingxuan, Shanghai Jahwa, and Maogeping grew by 102.5%, 35.1%, and 30.0% year-on-year in 2025, respectively, continuing their strong growth momentum. In terms of profitability, net profit attributable to shareholders for Maogeping, Shanghai Jahwa, and Lin Qingxuan increased by 36.7%, 41.1%, and 92.9% year-on-year, respectively, demonstrating strong profit elasticity. Overall, companies with powerful brands, products, and operational capabilities performed better, and the cash return capabilities of some Hong Kong-listed cosmetics companies are gradually becoming apparent.
Key companies continue to strengthen the scale and consumer mindshare of their hero products while generally achieving breakthroughs in multi-category expansion. Among cosmetics companies that have released annual reports, the revenue contribution of hero products and series falls into three tiers: 1) The first tier (over 40%): KanS's Red Waist series, Newpage's Baby Comfort Cream, and Lin Qingxuan's Facial Essential Oil. 2) The second tier (20%-30%): Genshang's Collagen Stick and Facial Mask Dressing (Blue Mask). 3) The third tier (10%-20%): Maogeping's Luxury Caviar Mask (accounting for over 30% of its skincare sales). Regarding category expansion, Shanghai Jahwa achieved breakthroughs in maternal & infant, color cosmetics, men's care, and hair care in 2025; Maogeping opened a new chapter in fragrance aesthetics; Lin Qingxuan's Small Gold Pearl Essence Water drove category optimization; Genshang obtained a Class III medical device certificate to enter the medical aesthetic biomaterials field.
Industry hotspots are emerging successively. Technological upgrades, scenario extensions, and shifting trends are driving 2026 to become a major year for new product launches. In terms of ingredients, following recombinant collagen, PDRN (Polydeoxyribonucleotide) has become a trending ingredient pursued by various brands, promoted for its anti-inflammatory, reparative, and anti-aging properties. With future approvals of PDRN as a Class III medical device, its popularity is expected to reach new heights in both medical aesthetics and skincare. Conceptually, the trend of using oils for skin care gained heat, with leader Lin Qingxuan achieving high revenue growth and various brands launching oil-based products. Brightening and whitening are also key directions for 2026, involving innovations in ingredients from biological, plant, and animal extracts, as well as breakthroughs in whitening mechanisms.
Marketing and Channels: Integration of Douyin's three traffic pools makes content capability increasingly important; e-commerce channel红利 is diminishing. Brands are deepening their integration of "self-streaming + key opinion leader streaming + shelf" models offline, while also paying more attention to offline channels like shopping malls and OTC. According to Euromonitor, the online share of China's skincare and color cosmetics markets rose to 52.2% and 59.3% respectively in 2025. By platform, Tmall's combined skincare and color cosmetics sales reached 115.54 billion yuan in 2025 and 23.26 billion yuan in Q1 2026, up 4.3% and 6.9% year-on-year, respectively. Douyin's sales were 155.70 billion yuan and 42.44 billion yuan for the same periods, up 12.9% and 1.8% year-on-year, respectively. The merger of Douyin's global traffic pools encourages brands to create their own content. As e-commerce红利 fades, more beauty brands are increasing investment in offline counters, OTC, KA, and other channels.
Medical Aesthetics 2025 Performance Review: Growth rates diverge based on sub-sector and development stage. The performance of key listed medical aesthetics companies diverged in 2025. Regarding revenue, Sihuan Pharmaceutical, with its rich product pipeline and in an operational upgrade phase, saw a 100% year-on-year increase; Beautiful Land Medical Health and Sihuan MedTech grew 17% and 2.3% year-on-year, respectively; while Imeik Technology and Haohai Biological saw revenue declines of 19% and 17%, respectively. Profitability also showed divergence: Sihuan Pharmaceutical's profit surged 226% year-on-year, with a net profit margin of approximately 40.5%; Beautiful Land Health's profit grew 39%, with a net profit margin of 10.6%; profits declined for Imeik Technology, Haohai Biological, and Sihuan MedTech by 34%, 40%, and 26%, respectively.
Upstream Medical Aesthetics Materials: Supply is increasing rapidly;红利 for single products still exists but is shorter and weaker; platform-based companies enabling others are poised to break through. Statistics show 147 registration certificates for medical aesthetic injectables have been issued in China year-to-date 2026, indicating an accelerating approval trend. This includes: 1) Botulinum Toxin: 8 certificates. Market positions for launched products are orderly, and newly approved products may gain volume through differentiated positioning. Recombinant botulinum toxin: 7 products are actively pushing clinical research, potentially intensifying competition. Multi-indication expansion, public hospital channel development, compliance, product combination therapies, and item development are seen as drivers for sustained single-product growth. 2) Regenerative Materials: 'Youth Needle' has 14 certificates, with 9 new approvals since 2025, indicating rapid supply increase. Manufacturers differentiating by particle size and specification through branding/pricing and technical features may break through. 'Ellansé' has 4 certificates, supply is relatively scarce, and manufacturers may succeed through long-term brand operations, doctor education, and medical promotion. CaHA: Only 2 certificates, suggesting broad future potential in the compliant market. 3) Collagen: 11 certificates for natural collagen, 7 for recombinant collagen. Despite increased certificates, demand remains insufficiently met. 4) Hydro-booster/Shuiguang injections: 10 certificates. Opportunities exist in compliance and ingredient innovation; PDRN has rich application scenarios, with multiple products in the registration pipeline, potentially filling market gaps. Upstream biomaterial suppliers with diverse product matrices capable of offering project combinations/comprehensive solutions and empowering medical aesthetics institutions across dimensions like doctor training, institutional operations, customer acquisition, and after-sales service are expected to succeed.
Investment Strategy: 1. Cosmetics Sector: Against a backdrop of subdued demand recovery, fading online traffic红利, narrowing gaps in product and operational capabilities, and temporary market share rebounds for international brands, the comprehensive capabilities of cosmetics companies in R&D, marketing, and channels need refinement. Recommendations focus on: 1) Targeting both ends of the market: high-end & high cost-performance/benefit ratio, namely: a) high-end positioned local color cosmetics leaders with high growth certainty and scarcity; b) companies with significant cost-performance/benefit ratio characteristics aligning with current consumption trends; 2) Companies in long-growth trajectory sectors potentially opening a second growth curve; 3) Companies with significant operational improvements and recovering net profit margins. 2. Medical Aesthetics Sector: The industry scale is expected to maintain steady growth in 2026, with accelerated certificate approvals, but structural opportunities persist. Increased upstream supply may also enhance the bargaining power and optimize the business models of downstream medical aesthetics institutions.
Risk factors include potential shortfalls in household purchasing power affecting discretionary spending on cosmetics & medical aesthetics; disorderly competition during industry consolidation eroding performance; potential underperformance of various reform initiatives; risks from unexpected policy changes, and black swan events like major public opinion crises.
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