Orient Securities has released a report indicating that the approval process for Class III injectable medical aesthetic products is accelerating, significantly enriching the supply of compliant materials compared to 2020. Regulatory oversight, combined with stricter scrutiny from traffic platforms and tax regulations, collectively limits the ability of small, scattered, and disorganized institutions to rely on illegal materials and low pricing to attract customers.
Leading institutions, leveraging their licenses, medical expertise, brand recognition, centralized procurement, and information systems, are well-positioned to absorb the clientele and physician resources from those phased out of the market, thereby increasing their market share. As the supply of upstream materials in the medical aesthetics industry continues to grow, the bargaining power of aesthetic service providers is rising. Concurrently, ongoing regulatory policies are accelerating the concentration of market share toward top-tier players, favoring compliant leading medical aesthetic institutions. Here are the key points from Orient Securities.
Accelerated Expansion of Compliant Upstream Materials Expands Options for Aesthetic Institutions and Enhances Their Industry Leverage
The approval of Class III injectable medical aesthetic products has sped up from 2020 to 2026, with the supply of compliant materials now significantly more abundant than in 2020. By the end of 2020, approximately 50 Class III injectable products—including hyaluronic acid, botulinum toxin type A, and collagen—had been approved for use in China. This consisted of about 40 hyaluronic acid products, around 6 botulinum toxin type A products (from 3 brands), and about 5 collagen products. Regenerative injectable materials had not yet achieved large-scale approved supply. According to data from Guanyan Tianxia, by March 2026, the number of approved products had increased to 121, including 82 hyaluronic acid, 7 botulinum toxin, 16 collagen, and 16 regenerative material products. Between May 2025 and March 2026, the number of approved products rose from 94 to 121, a 29% increase, driven primarily by domestically produced hyaluronic acid, recombinant collagen, and regenerative materials.
This rapid expansion of compliant products reduces institutions' reliance on a few traditional hyaluronic acid products and enriches offerings in areas like anti-aging, facial contouring, and skin rejuvenation. It also strengthens the bargaining power and product selection of medical aesthetic institutions vis-à-vis suppliers. Chain leaders capable of physician training, centralized procurement, and multi-product combination treatments are better positioned to convert this "new supply" into revenue.
Ongoing Regulatory Enforcement Cools Disorderly Competition, Benefiting Compliant Top-Tier Institutions
On the policy front, regulation has shifted from targeted campaigns to routine, cross-departmental oversight. In 2020, eight government departments required strict approval of institutional setups, medical disciplines, and project filings. In 2021, another eight-department initiative targeted illegal medical beauty practices. From September 2022 to February 2023, eleven departments, including the State Administration for Market Regulation, conducted a centralized campaign against false advertising, illegal medical practice, counterfeit drugs and devices, and price fraud. A 2023 directive further established a long-term mechanism for cross-departmental regulation. A new value-added tax (VAT) rule effective from 2026 explicitly excludes for-profit medical aesthetic institutions from the tax exemption scope for medical services, raising tax and operational compliance costs.
Data from institutions shows that, according to iResearch, there were about 13,000 qualified medical aesthetic institutions in China in 2019, but over 80,000 unlicensed shops. By January 2024, the National Health Commission reported that the number of compliant specialized medical aesthetic institutions had grown to 18,600. Based on the 2025 annual report of Lancer, over 18,000 unlicensed institutions were shut down in 2025, and more than 320 doctors had their licenses revoked for violations. Orient Securities believes that regulatory oversight, platform audits, and tax standardization collectively compress the space for "small, scattered, and chaotic" institutions that rely on illegal materials and low prices. Top institutions, leveraging their licenses, medical expertise, brands, centralized procurement, and information systems, are likely to absorb the customers and physician resources of those phased out, driving market share growth.
Financial Performance of Medical Aesthetic Institutions Shows Signs of Improvement
1) Lancer: In 2025, medical aesthetics revenue reached 3.026 billion yuan, up 3.27% year-on-year, with gross margin improving 1.3 percentage points to 55.8%. Non-surgical revenue was 2.668 billion yuan, up 6.84% year-on-year. In its H1 2026 performance forecast, the company expects to achieve net profit attributable to the parent (excluding non-recurring gains and losses) of 130 million to 170 million yuan, a change of -4.51% to +24.87% year-on-year. Excluding the impact of equity investment gains/losses from Ruoyuchen and retroactive income tax payments and fines, the company's net profit from daily operations is expected to grow 30% to 60% year-on-year, reflecting the growth of its medical aesthetics and women's apparel main businesses, as well as operational improvements from supply chain and expense management.
2) Beauty Farm: In 2025, revenue was 3.001 billion yuan, up 16.7% year-on-year, with adjusted net profit of 381 million yuan, up 41.0% year-on-year. A H1 2026 profit alert shows the company expects revenue of at least 1.88 billion yuan, representing year-on-year growth of at least 28%, and adjusted net profit of at least 260 million yuan, representing year-on-year growth of at least 36%.
Risk Reminders: Intensifying industry competition, weaker-than-expected consumer spending, and delays in obtaining approvals for upstream materials.