On the evening of August 18, GIANT BIOGENE unveiled its interim results for the first half of 2026, revealing a 6.3% year-on-year decline in revenue to RMB 2.918 billion. Net profit for the period also took a steeper hit, dropping 20.5% to RMB 940 million.
The faster decline in profit compared to revenue underscores a dual challenge facing the company: products are selling at a slower pace, yet the sales expenses required to move inventory have surged. For the first half of the year, revenue from functional skincare products fell to RMB 2.301 billion, down from RMB 2.41 billion in the prior-year period, while medical device revenue decreased approximately 12% to RMB 610 million from RMB 693 million.
Management attributed the dip in functional skincare sales to intensifying industry competition and a strategic shift in sales structure that reduced revenue from live-streaming channels with key opinion leaders. The medical aesthetics segment, meanwhile, grappled with a changing offline retail environment and heightened competitive pressures.
These results come despite aggressive promotional efforts. Selling and distribution expenses for the six-month period ballooned to RMB 1.267 billion, a 19.7% increase year-on-year. Consequently, the sales expense ratio jumped by more than nine percentage points, climbing from 34% in the same period last year to 43.4% in the first half of 2026.
The company explained that it has ramped up investment in long-term brand building, consumer education, and brand audience expansion. Additional spending was directed toward new product launches, self-operated channel development, and refined user management initiatives. For a business whose revenue foundation rests on functional skincare, trimming this budget is hardly a viable option.
Notably, the reduced reliance on celebrity livestreamers has not translated into lower marketing costs. Instead, funds are shifting toward brand cultivation, in-house streaming, new product promotions, user engagement, and proprietary channel growth. Easing the dependence on influencers does not mean paying less in what could be termed a "traffic tax."
This rising cost burden has inevitably eroded profitability, with GIANT BIOGENE's net margin slipping to 32.21% in the first half of 2026, a decline of over five percentage points from a year earlier.
Looking ahead, investors will be watching two key catalysts. First, whether the increasingly expensive marketing outlays can eventually reignite growth in the skincare business. Second, whether newly approved products, including the first Class III medical device "753 Collagen Needle" under the Cute & Fit brand and an injectable recombinant collagen and sodium hyaluronate composite solution designed to smooth cheek contours, can provide a much-needed boost to the medical aesthetics segment in the second half of 2026.
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