Unstable Foreign Dominance in Daily Chemical Market

Global pharmaceutical companies speed up their steps on taking up cosmeceutical market.

Although it is not a fresh topic that pharmaceutical companies enter the daily chemical industry, recently this phenomenon has been developing towards a promoting trend. GlaxoSmithKline, the British pharmaceutical giant, purchased the laboratories of American skin-care producer Stiefel company with 3.6 billion dollars in July 2009. Stiefel officially entered Guangzhou market on October 24. That is another big step after it introduced Sensodyne a high-efficiency type toothpaste, to China in 2008. At the same time, “Yunnan Baiyao”, a domestic pharmaceutical company, after the successfully entry into daily chemical market, has improved sales from 30 million to 1 billion just in five years. Now it launched a new high-end Chinese herbal medicine dandruff shampoo, Yang Yuan Qing to expand development territory with multiple products.

“From the trend of industrial chain extension, pharmaceutical products which locates at the highest end of this chain, have more professional advantages in transition to the daily chemical cosmeceutical products. But it is much more difficult for daily chemical products to upgrade from lowest end to cosmeceutical products.” Zhou Jiuping, assistant of general manager in the health products division of Yunnan Baiyao Group, told the reporters. The developing trend in the future cosmetics market is towards combination of both medical and daily chemical functions. Despite the dominance of foreign brands in cosmeceutical market, it has become unstable due to the entries of domestic pharmaceutical companies.

Cosmeceutical Market: A Fortress

“The Group has a good performance this year. Toothpaste is one of the products with the fastest growth. The annual profit of toothpaste is bound to exceed 1 billion.” Zhou Jiuping revealed the information at a recent media conference. In the first three quarters, Yunnan Baiyao is expected to achieve a net profit of 616-698 million RMB, up 50-70% over the same period last year. Toothpaste business has reached approximately 500 million RMB in the first half year, with a large increase compared to its sale of 50 million pieces, 700 million RMB last year.

It is known that, according to the statistics in the first half year, Crest takes about 20% of market share; Colgate and Darlie take 15%; Zhonghua and Baiyao take 9-10%. Baiyao is the only domestic brand among the top five. TX Investment forecast that, the main growth of Yunnan Baiyao in the future will come from toothpaste and other cosmeceutical products. Toothpaste business is expected to keep a growth rate above 40 % within the following three years.

According to Zhou Jiuping’s introduction, Yunnan Baiyao is striving to build Baiyao’s own industrial chain, aiming to layout in the different parts of this chain in order to have a say in a stronger position in Baiyao field. The setting of a health products division is to jump out of the traditional treatment field, and get involved more into the needs of modern life, achieving the major health layout. “In addition to Yunnan Baiyao, we have integrated resources in the international context and developed a new product-Yang Yuan Qing, a Chinese herbal medicine dandruff shampoo, which has been officially released to market. It is known that, in the future, Yunnan Baiyao will fully enter the market of personal care products and release various cosmeceutical products including facial cleanser, cream, mask, etc..

GlaxoSmithKline, Sensodyne: Preparation for New Big Steps

The relevant data show that by 2010, the total sales of cosmetics market in China will reach 120 billion RMB, in which cosmeceutical share in the market will increase from 20% to 40 % with a total amount of 48 billion RMB. Now there are more than 170 pharmaceutical companies involved in daily chemical market.

From Tong Ren Tang’s entry into daily chemical market with its first cosmetic flagship store in Beijing, to Yunnan Baiyao’s becoming the only domestic toothpaste brand which could compete with the foreign brands, more and more domestic pharmaceutical companies have entered daily chemical market. Guangzhou Wanglaoji Pharmaceutical Company Limited have lauched Acne Wanglaoji gel. Kunming DIHON have launched 6 series Chinese herbal medicine toothpaste. CONBA have launched maternal skin repair series products. Both China Shenhuo Pharmaceutical and Guangzhou Jing Xiu Tang Pharmaceutical prepare to enter cosmeceutical market.

It is learned that, after GlaxoSmithKline purchased Stiefel laboratories with 3.6 billion dollars last year, its business in cosmetics has improved by nearly two times, and its share in cosmeceutical market has also rose to 8%. This cosmeceutical brand has been officially introduced to mainland China.

Zhou Jiuping told reporters that pharmaceutical companies have more professional advantages to transfer from high-end to low-end cosmeceutical products. Given the frequent safety issues of daily chemical products, pharmaceutical companies have more rigor attitudes. “At present, the domestic market has a volume of one 100 billion RMB. According to international data, when GDP per capita reach 3,000 dollars, there will be more high-speed growth in the cosmetics market. China has reached this standard last year. Correspondingly, the large cosmeceutical industrial capacity will attract more and more pharmaceutical enterprises. And those which have entered this market are bound to expand their business. The final result is to leverage the whole pattern in domestic daily chemical market.

Data:

According to statistics, from 2004 to 2007, the annual growth rate of sales in cosmeceutical market reached 10%-20%, and this figure is expected to maintain from 2008 to 2012, twice the figure in European market.

图片关键词：云南白药牙膏、同仁堂、葛兰素史克Stiefel护肤品