Specifically: 1. For example, BASF's EHT and DHHB patents have expired, and according to the company announcement of Kesi Co., Ltd.'s 2020-2021 related changes in raising funds, Cosi Co., Ltd.'s subsidiary Ma'anshan Kesi has launched EHT, DHHB and other sun protection products. A

(Report Producer/Author: CITIC Securities, Du Yifan, Xu Xiaofang)

The four major technological paths have their own merits, and the compound ingredients further increase the barriers

Four major categories of production technologies: plant extraction, chemical synthesis, biological fermentation, and synthetic biology

Current raw material production Technology mainly includes four major types: animal and plant extraction and separation and refining technology, chemical synthesis, biological Fermentation and synthetic biology ; among them, chemical synthesis technology is more traditional and is mainly used in the production of auxiliary raw materials and some sunscreens and moisturizers; natural plant extraction technology and biological fermentation technology are the current mainstream of the industry; and synthetic biology is the future The development direction of production technology.

Modern plant extraction technology has become a craze under the trend of pure beauty.

Animal and plant extraction and separation and refining technology refers to the technology to extract the active ingredients from natural animals and plants. The ingredients extracted from plants are mainly vegetable oils (volatile oil), flavonoids, polyphenols, polysaccharides, etc., which are used in the fields of whitening, anti-aging, moisturizing, sun protection and antisepsis. Ingredients extracted from animals are mainly animal oils, animal mucopolysaccharides, placenta extract, silk hydrolyzate, bee products, lecithin, collagen, etc., which are used in moisturizing, soothing, emollient, anti-aging, antibacterial and other fields. . Common technologies currently include: water extraction, alcohol extraction, organic solvent extraction, steam distillation and other traditional production technologies, as well as supercritical CO2 extraction technology, microwave extraction technology, ultrasonic extraction technology, biological enzymatic hydrolysis technology, Modern production technologies such as semi-bionic extraction technology.

Natural plant extraction technology has become a craze under the trend of "pure beauty". Taking China as an example, the prospectuses of leading plant extraction companies Rheinland Bio and Chenguang Biotech stated that plant extraction technology has a long history of development, but the technology level is uneven. Traditional extraction methods such as acid-base extraction method and organic solvent extraction technology Low barriers lead to low industry concentration. According to data from Qianzhan Research Institute, only 4.5% of China’s plant extraction companies with annual sales of more than 20 million yuan in 2020.

In recent years, leading international companies such as Ashland and Croda have pointed out that consumers have gradually paid attention to and demanded that the ingredients be natural or natural derivatives. "Pure beauty" with natural ingredients is one of the global trends. The Aslan report shows that there are 15,466 products with natural claims among the products of international multinational companies, and the category compound growth rate from 2015 to 2020 is 10%. The leading international raw material company takes natural plant extraction technology as one of its core competitiveness. Ruheda's Crodarom sub-brand is dedicated to plant extracts. Through self-developed microwave extraction and ultrasonic-assisted extraction technology, it subdivides all combination parameters (solvent, temperature, extraction time, target active substances, plant tissue, particle size) to select more Effective plant extraction technology reduces environmental pollution and enables personalized customization.

Betaini has extensive technical reserves in plant extraction technology. Now the company is working on selecting active ingredients that can solve corresponding skin problems from more than 6,500 Yunnan specialty plants, and is also working hard to promote the formulation of plant raw material standards. In 2021, Bethany Research Institute independently/jointly successfully developed a variety of Bethany's exclusive active substances, such as Physalis Calyx Extract, Kidney Tea Extract, Peony Root Bark Extract, Green Thorn Fruit Ceramide, Pu'er tea extract, Green Thorn Fruit third-generation wrapped particles, Tengchong hot spring bacteria source ectoin, etc.

In addition, Proya has obtained patents for the extraction of high-purity lecithin and red ginseng extract ingredients from guava leaves, pine nut oil and camellia oil cake. Shanghai Jahwa produces a variety of traditional Chinese medicine extracts, plant fruit oils and plant seed oils, Artemisia annua extract, fish, cordyceps extract, peppermint extract, mugwort leaf extract, ginseng extract, burdock extract, and cistanche deserticola. Bulb extract, barley sprout extract, perilla young leaf extract, sunflower sprout and chickpea seed extract have accumulated many patents. However, Bloomage Biotech and Lushang have fewer patents in the field of plant extraction.(Report source: Future Think Tank)

Chemical synthesis is more traditional and is mainly used for the production of auxiliary materials, synthetic sunscreens, and synthetic moisturizers

Chemical synthesis refers to the use of natural resources or simple molecules through oxidation reactions, reduction reactions, alkyl groups A series of chemical reactions such as acylation reaction and acylation reaction are used to synthesize compounds with special properties or relatively complex compounds. These include basic compounds (ethanol, acetic acid, acetone, etc.) and fine compounds (synthetic polymers, etc.). Most cosmetic raw materials formed through chemical synthesis are mainly used as auxiliary materials to change the sensory form of cosmetics and maintain the stability of cosmetic ingredients (such as surfactants, thickeners, emulsifiers, preservatives, antioxidants, synthetic flavors and fragrances, synthetic coloring agents, etc.), as well as sunscreens and synthetic moisturizers. Chemically synthesized raw materials can also achieve the performance of natural raw materials, and in comparison, production is more standardized and efficient. However, chemical synthesis technology has shortcomings in producing functional active substances, such as long synthesis paths, complex conditions, and large environmental pollution.

Biological fermentation technology is the mainstream and hot spot in the industry at this stage.

Biological fermentation technology is a modern biological high-tech that uses enzyme engineering, microbial metabolic engineering and biochemical engineering. It uses the growth characteristics of cells and biocatalytic systems to combine with organic substrates. A reaction occurs to obtain the target active product in a targeted manner, that is, a biological reaction synthesizes substances or cells. Fermentation microorganisms include fungi, bacteria and protists, among which fungal fermentation includes medicinal fungi fermentation, yeast fermentation and marine fungi fermentation. Microbial fermentation can not only synthesize easily absorbed small molecules such as amino acids, organic acids, flavonoids, polyphenols, , etc., but also produce important macromolecules such as polysaccharides, polypeptides, or proteins. It can not only produce active ingredients with functional effects, but also Can produce surfactants and other auxiliary materials. For example, Gluconobacter can produce vitamin C, which has anti-aging and whitening effects, while Escherichia coli can produce glycine betaine, which is used as a raw material for non-ionic surfactants.

Biological fermentation technology is currently the mainstream of the industry. The advantages of biological fermentation technology are: ① Technically it has better controllability and safety; ② Production is energy-saving and causes less environmental pollution; ③ As a result, it can enrich functional substances, reduce toxicity, and even develop new functions. In recent years, domestic and foreign companies have used biological fermentation technology to produce large-scale raw materials. For example, Huaxi Biotechnology utilizes the characteristics of streptococcus metabolism to produce hyaluronic acid and uses biological fermentation technology to achieve large-scale production of sodium hyaluronate; On the one hand, the development of active skin care ingredients based on biological fermentation liquid has become a selling point, such as SK-II skin care essence , Lancôme small black bottle , Estee Lauder small brown bottle, Herborist Tai Chi yeast essence, etc.

Huaxi Biotechnology has strong technical reserves in biological fermentation technology: the company has built a key technology system for green biomanufacturing of functional sugars and amino acid bioactives, and the production scale and yield of microbial fermentation of hyaluronic acid are among the best in the world. Leading the way, and continuously investing in raw material research and development strategies, we are committed to diversifying active raw materials and enriching the raw material matrix of bioactive substances and . In addition, Lushang Development is based on Freda Bio's R&D system and has made many achievements in biological fermentation; Shanghai Jahwa and Proya also have patent accumulation.

Synthetic biotechnology is the development direction of future production technology

Synthetic biology is the "third bioscience revolution" following the discovery of the double helix structure of DNA (1953) and the sequencing of the human genome (2003). Synthetic biology brings together and integrates many disciplines such as life sciences, engineering, and information science, and has broad application prospects in many fields such as natural product synthesis, chemical industry, bioenergy, and biomedicine. The goal of synthetic biology is to program DNA to instruct organisms to react according to designed specifications. In order to achieve the goal, biological originals need to be combined and assembled into genetic circuits, and the genetic circuits need to be designed and modified to achieve new cells or organisms that respond according to the designed specifications.By inputting glucose , methanol , oleic acid and glycerol and other substances to design and modify the genetic route, the yeast cells will efficiently output astaxanthin, β-carotene and lycopene according to the design specifications. and other products. The types of cosmetic raw materials that can be developed include natural products, such as astaxanthin, resveratrol, glycosides, squalene, etc. Industrial chemicals include ethanol, butanol, glycerol and organic acids.

Synthetic biotechnology is the driving force for future industry development, and the growth trend is obvious. According to SynBioBeta data, financing for synthetic biology startups reached $18 billion in 2021, 2.3 times that of 2020 and 5.8 times that of 2019. According to Web of science, the number of synthetic biology-related papers and patents published in 2021 reached 8,132, an increase of 98.7% compared to 2010.

In 2020, the American market research company BCC Research released "Synthetic Biology: Global Market". Report data shows that the global market size directly driven by synthetic biology has reached US$5.319 billion in 2019, and is expected to reach US$18.885 billion by 2024, with a compound annual growth rate of 28.8% from 2019 to 2024. Judging from the market size of different fields around the world, applications related to medical and health dominate the commercialization of the synthetic biology industry, while in the fields of food, agriculture, consumer goods and chemical industry, important market opportunities are nurtured, and relevant market segments are space is growing at a high CAGR level. In terms of geographical market size, the global synthetic biology market is dominated by North America and Europe, accounting for 58.5% and 23.6% of the global total market share in 2019 respectively; the Asia-Pacific region is the third largest market, accounting for 2019 global total market share. With a market share of 15.1%, there is still a clear gap with North America.

Compound ingredients have become a model for R&D companies to improve barriers

As competition in the cosmetics industry becomes increasingly fierce, imitation raw materials have become the key to breaking new products and new brands. Raw materials with a single molecular formula are relatively easy to copy. Once the patent protection period expires, popular ingredients will often be added to tens of millions of products. Due to the ambiguity of its formula, the compound solution is difficult to completely imitate, and the compound ingredients can separately apply for the trademark to protect the intellectual property rights, further raising the barriers; in addition, under plant extraction technology and biological fermentation technology, the origin of raw materials, production environment, etc. Significant impact on raw material performance, making key ingredients more difficult to imitate.

L'Oreal Boseine itself is a compound solution. Although the patent has expired, it is still difficult to imitate

On December 22, 2000, L'Oreal applied for a Boseine patent in France with the English name "NOVEL C-GLYCOSIDE DERIVATIVES AND USE THEREOF". On December 21, 2001, L'Oreal Group submitted an international application to WIPO. The L'Oreal Boseine patent family has patent layout in the United States, the European Patent Office, Australia, Japan, Spain, and Portugal, with the French patent "FR0104166" as the core. The PCT application date of Boseine is December 21, 2001. The protection period is until the end of 2021.

L'Oreal Bose's patent "NOVEL C-GLYCOSIDE DERIVATIVES AND USE THEREOF" translates as "Novel C-Glycoside Derivatives and Their Uses". The patent covers the following aspects: 1) involving new C-glycoside derivatives, synthesis methods of glycoside derivatives and compounds containing glycoside derivatives; 2) involving C-glycoside derivatives in physiological media and cosmetic compounding For use in drugs or pharmaceutical formulations, C-glycoside derivatives and their formulations are designed to stimulate glycosaminoglycans containing D-glucosamine and/or N-acetyl-D-glucosamine residues. Sugar synthesis, promotes fibroblasts and/ or keratinocytes synthesize hyaluronic acid and collagen; 3) Cosmetic methods involving the use of C-glycoside derivative complexes. Among them, the C-glycoside derivative is popularly named Boseine by L'Oreal.

Procter & Gamble SK-II Pitera is the fermentation filtrate, and there are extremely high barriers to ingredient duplication

After Procter & Gamble acquired SK-II, it applied for the trademark "Pitera" in Japan in 1992. Pitera is the product filtrate fermented by galactosaccharomyces-like bacteria on a specific culture medium.98.7% of the components in the filtrate are water, and the remaining components from high to low are sugars, lipids, organic acids, amino acids, vitamin B5 (panthenol, pantothenic acid ), vitamin B2, etc. The complexity of producing Pitera lies in the complex composition of lipids produced by strains, including ethanol, isopropyl alcohol, isobutyl alcohol, isoamyl alcohol, ethyl acetate, etc., which cannot be artificially blended. Fermentation production by galactosaccharomyces-like bacteria (Trichosporon Kashiwayama strain) is required. According to the classification of State Intellectual Property Office , the galactosaccharomyces-like bacteria fermentation filtrate patent family includes 31 patents of the same family, with the family number 14583081, forming a patent family with the "JP11229479" patent as the core covering many countries around the world.

Huaxi Biotech has launched 4 new compound ingredients

Huaxi Biotechnology has conducted in-depth research in the field of skin care product efficacy combinations and launched four personal care raw material products in 2021, BiobloomTM ME-1 and BiobloomTM. ME-2, HyacrossTM hyaluronic acid microbeads TG300 and Bio-youthTM-BLC. Bio-youthTM-BLC contains the functional ingredients Ectoine and ergothioneine . Ectoine is a cyclic amino acid derivative obtained through microbial fermentation technology. As an important substance for extremophiles to survive in extreme environments, ectoin can promote the association of water molecules cluster and form a hydration layer around DNA and proteins, thus protecting the internal macromolecules (proteins, proteins, etc.) of microorganisms. enzyme nucleic acid) and cell membranes to protect them from damage by ultraviolet rays, high temperature, and high salt; super-active ergothioneine is a product of Huaxi Biotechnology through the treatment of Hericium and The powdered ergothioneine obtained by the combined fermentation of pine mushrooms and a specific proportion of super-active hyaluronic acid (Xi Minxiu, Mw5000Da) and trehalose spray.

Comparing the regulatory methods of various countries, China's new regulations are relatively strict

The regulatory system: mainly national regulations, supplemented by industry self-discipline

The "European Union Cosmetics Regulation" (EC) 1223/2009 is the core regulation of the European Union . The Federal Food, Drug, and Cosmetic Act (FD&C Act or FDCA) is the basic law governing cosmetics in the United States. Japan promulgated the Pharmaceutical Affairs Law (PAL) in 1960. Later, due to the Kanebo rhododendol and leukoplakia incident, the Pharmaceutical Affairs Law was revised and renamed the "Pharmaceuticals, Medical Devices, etc. Quality, Quality, etc." in November 2014. "Relevant Laws on Efficacy and Safety Guarantees, etc." has become the basic law governing cosmetics. The earliest regulations for China's cosmetics industry are the " Cosmetics Hygiene Supervision Regulations " in 1989. In 2020, the "Cosmetics Supervision and Management Regulations" were released. With this as the core, a series of relevant supporting regulations were introduced and revised.

The United States and Japan emphasize the impact of functional cosmetics on human body structure and functions, and define them as OTC pharmaceuticals and cosmetics and quasi-drugs respectively. China clearly defines hair dyeing, perming, freckle whitening, sun protection, anti-hair loss cosmetics and cosmetics that claim new functions as special cosmetics, while cosmetics with anti-acne, anti-wrinkle and other functions are still defined as ordinary cosmetics. The EU manages functional cosmetics as general cosmetics without making any distinction.

When it comes to whitening and freckle removal products, Japan makes differentiated distinctions based on product claims and mechanisms of action. If the product only claims to "brighten skin", it only needs to be managed as ordinary cosmetics. If the product further claims the function of "removing or lightening spots or freckles by inhibiting the production of melanin" based on the whitening claim, it needs to be managed as a quasi-drug. The United States and China both define them as "special effect" cosmetics, which are OTC pharmaceutical cosmetics and special cosmetics respectively.

Regarding sunscreen products, sunscreen products in the United States and Japan are defined as "special efficacy" cosmetics, while Japan positions them as cosmetics and quasi-drugs respectively based on their efficacy claims. "Modern Cosmetic Science and Technology" (Volume 1) (Qiu Bingyi, Gao Zhihong) pointed out that Japan defines sunscreens used to prevent sunburns and freckles from causing spots and freckles as quasi-drugs, which require a strict approval system.For sunscreen products that do not claim this effect, they are positioned as cosmetics, and 32 restricted sunscreen raw materials are listed for restricted use list management.

Cosmetics supervision: China's supervision of cosmetics is generally strict, and the United States and Japan have strict classification management of cosmeceuticals

International comparison: Japan and the United States have strict supervision on functional cosmetics, which are equivalent to medicines, and the EU has no distinction

From the perspective of the supervision of general cosmetics, the degree of strictness ranges from From high to low, they are China, the European Union, Japan, and the United States. The EU requires product owner registration, GMP requirements and safety assessment reports; the United States attaches great importance to corporate self-discipline and voluntariness and does not require pre-sale approval. The law only restricts or prohibits the use of colorants or a few raw materials, and emphasizes product labeling; Japan requires manufacturing and manufacturing and sales industry licenses and product filings; China emphasizes compliance with legal regulations in five major aspects: production access licensing, product registration filings, GMP requirements, safety assessments and efficacy claims.

Judging from the supervision of functional cosmetics, the countries with the highest degree of strictness are China, Japan, the United States, and the European Union. The EU does not differentiate between functional cosmetics alone. The United States defines them as OTC drugs. Those that comply with OTC monographs and relevant legal regulations do not need to be approved by FDA and can be directly marketed. Those that do not comply with the requirements need to go through the NDA process to obtain FDA approval. Approval requires data on product ingredients, safety assessments and efficacy claims. Japan defines it as a quasi-drug, which requires pre-sales approval, safety assessment and efficacy declaration materials. China, on the other hand, attaches equal importance to ordinary and functional cosmetics, and also implements a registration and approval system for special cosmetics, requiring safety assessment and efficacy claims.

China: Strict control over all aspects from production to efficacy claims

① In terms of production access, implement a production licensing system.

② In terms of product access, a registration and approval system is implemented for special cosmetics, and a filing system is implemented for ordinary cosmetics, and a complete formula sheet is required to be submitted. Special cosmetics can only be produced and imported after being registered by the Drug Supervision and Administration Department of the State Council. Domestic general cosmetics shall be registered with the drug regulatory department of the people's government of the province, autonomous region, or municipality directly under the Central Government where the filer is located before being put on the market for sale. Imported general cosmetics must be registered with the drug regulatory department of the State Council before importation. In addition, Article 19 of the "Regulations on the Supervision and Administration of Cosmetics" and Article 26 of the "Management Regulations on Cosmetic Registration and Filing Materials" stipulate that registrants and filers are required to submit product formulas or complete product ingredients when handling registration or filing. The product formula table is required to include raw material serial number, raw material name, percentage content, purpose of use and other details. For product formulas with clearly specified percentage content, the content of all raw materials should be provided.

③ In terms of GMP requirements, the new "Cosmetics Supervision and Administration Regulations" require that manufacturing companies should organize the production of cosmetics in accordance with the requirements of the cosmetics production quality management specifications formulated by the State Council's Drug Supervision and Administration Department, and require traceability of activities, set thresholds for hardware, and "responsible for quality and safety" Establish an accountability system with "people" as the core.

④ In terms of safety assessment, before cosmetics registration and filing, the registration applicant and filing person should conduct a safety assessment by themselves or entrust a professional organization.

⑤ In terms of efficacy claims, the "Cosmetics Efficacy Claims Evaluation Standards" will be released in 2021. Cosmetic registrants and filers should evaluate the efficacy claims of cosmetics in accordance with the requirements of the "Specifications" and upload them on the special website designated by the State Food and Drug Administration A summary of the basis for the product's efficacy claims. In the efficacy claim system, the difficulty of claiming products with different efficacy is different. The stronger the efficacy, the more sufficient scientific evidence is needed to prove it. Can be directly identified through vision, smell and other senses (such as cleaning, makeup removal, beauty modification, fragrance, toning, hair dyeing, perming, hair color care, hair removal, deodorization and auxiliary shaving, etc.), or through simple physical covering, If the effect is achieved through adhesion, friction, etc. (such as physical covering, freckle removal and whitening, physical exfoliation, physical blackhead removal, etc.) and the efficacy claims that only have physical effects are clearly marked on the label, they are exempt from publishing a summary of the basis for the product efficacy claim.However, cosmetics with freckle whitening , sun protection, hair loss prevention, acne removal, nourishing and repairing effects should be evaluated through human efficacy evaluation tests for efficacy claims.

Raw material supervision: Europe, the United States and Japan each have their own characteristics, and China draws on their strengths

International comparison: the EU's restricted and permitted list management, the United States and Japan use list-based management of functional cosmetics and implement approval systems

By comparison, the EU's ban on cosmetic raw materials The restricted and permitted use lists are the most strictly managed. The appendix of the EU Cosmetics Regulation (EC) provides 1,657 banned lists, 322 restricted raw materials, 60 permitted preservatives, 32 permitted sunscreens, and 153 permitted colorants. The number on the list is much higher than that in China , Japan, and the United States, mainly because the EU does not distinguish between general cosmetics and special cosmetics. To a certain extent, China has learned from the EU’s list management of prohibited, restricted and permitted uses, and combined it with the list-based management and approval procedures of the United States and Japan to form a more stringent raw material management system.

U.S. cosmetic ingredients (except color additives) do not require FDA approval before being marketed. There are only 8 banned raw materials and 3 restricted raw materials. In addition, manufacturers can choose raw materials they think are safe. They only need to meet the requirements of colorants, prohibited and restricted lists, and do not need to go through FDA pre-sales approval. Manufacturers are responsible for the safety of raw materials. OTC pharmaceuticals and cosmetics: raw materials need to comply with OTC monographs and relevant regulatory requirements, and new raw materials need to go through a strictly reviewed NDA process. Taking sunscreen products that are OTC drugs as an example, the number of approved sunscreen raw materials in the United States is only 16, which is far less than the approved scope of the European Union (32 types), Japan (32 types), and China (27 types).

The stricter the regulations, the slower the development of new raw materials for sunscreen agents will be. Due to stricter regulations, companies need to invest in higher R&D costs and application review costs, and the R&D and launch cycle is longer, resulting in weaker national innovation capabilities in this field and fewer product types. Specifically: ① European raw material companies’ sunscreen R&D innovation frequency is higher than that of American raw material companies. For example, in 2021, DSM of Germany launched the sunscreen ingredient PARSOL® EHT, which provides the highest UVB absorption rate on the market, can achieve high SPF at low concentrations, and has ecological and environmental properties. British Croda launches Solaveil™ CTP-7 silicone-coated titanium dioxide powder (UVB filter) suitable for advanced sun protection, skin care and make-up products, providing effective SPF value and light coverage. However, neither Dow Chemical nor Lubrizol in the United States has focused on the research and development of sunscreen agents. ② The sunscreen formulas provided by raw material companies in Europe are richer than those in the United States. According to the UL database, the number of formulas provided by BASF , DSM, Asland and Croda in Europe is significantly higher than the number of formulas provided in North America and Asia. For example, Croda can provide 96 formulas in Europe, but only 17 and 14 formulas in North America and Asia respectively.

China: Learn from the strengths of others, create an original raw material submission code system, and achieve one-code traceability

China implements catalog management of prohibited, restricted and permitted use of cosmetic raw materials mainly based on the "Cosmetic Safety Technical Specifications", and also implements the "Catalogue of Used Cosmetic Raw Materials" ( The raw materials in the 2021 edition are subject to a submission code system. The 2015 "Cosmetic Safety Technical Specifications" formulated a catalog of prohibited and restricted substances and permitted substances (including preservatives, sunscreens, colorants, and hair dyes). In May 2021, the China Food and Drug Administration revised the "Catalogue of Prohibited Raw Materials" and the "Catalogue of Prohibited Plant (Animal) Raw Materials in Cosmetics" in the "Technical Safety Specifications for Cosmetics". Up to now, the regulations provide requirements for 1,393 prohibited ingredients, 47 restricted ingredients, 51 permitted preservatives, 27 permitted sunscreens, 157 permitted colorants and 75 permitted hair dyes in cosmetics. The "Catalogue of Used Cosmetic Raw Materials" was revised in April 2021, and the raw materials used in the 2015 version were updated. The new version of the Catalog includes 8,972 raw materials, 189 new raw materials compared to the 2015 version, and standardized name information for 517 raw materials.

implements a reporting code system for existing raw materials to achieve one-code traceability.The "Specifications for Cosmetics Registration and Filing Application Materials" stipulates that each raw material produced by each manufacturer needs to apply for a corresponding submission code, which is equivalent to the ID card of the raw material. The same raw material will generate different reporting codes in different companies. If you choose an enterprise that has not obtained the reporting number, you may not be able to obtain the safety information documents of the raw materials, which will directly affect the registration and filing of cosmetic products.

"Cosmetics Registration and Filing Management Measures" stipulates in detail the registration and filing process of new raw materials. For new cosmetic raw materials with antiseptic, sunscreen, coloring, hair dyeing, freckle removal and whitening functions: the registrant submits relevant materials to apply for registration, and the accepting agency shall complete the formal review of the application materials within five working days from the date of receipt of the application. The application materials will be forwarded to the technical review agency within three working days after accepting the registration application. The technical review agency shall conduct a technical review in accordance with the requirements of the technical review within 90 working days from the date of receipt of the application materials and give a decision on whether to approve registration. in conclusion. Other new cosmetic raw materials are subject to filing management. The drug regulatory department shall publish relevant information on the registration and filing management of new cosmetic raw materials to the public for public inquiry within five working days from the date of completion of registration and filing of new cosmetic raw materials, and set up a three-year monitoring period. If no safety problems occur during the monitoring period, they will be included in the catalog of used cosmetics or safety technical specifications. If safety problems are found, the registration and filing will be revoked. (Source of the report: Future Think Tank)

The raw material side benefits most from the strict supervision of China’s new cosmetics regulations

The relevant regulations for China’s cosmetics industry under the new regulations are more stringent than those in other major beauty markets. The requirements for enterprise access have been improved. For cosmetics registration and filing, complete formula sheets are required to be submitted, and a "quality and safety manager" is required to be established in the production process to establish an accountability system; the first raw material submission code system is implemented to achieve one-code traceability. Strengthen the cooperative relationship between raw material manufacturers and brand owners, bind raw material manufacturers and brand owners, improve the safety and effectiveness of cosmetics; and implement a strict efficacy declaration system. The strict supervision of formulas under the new

regulations will help domestic cosmetics brands accelerate their focus on research and development.

In the new regulations guided by the "Regulations", on the one hand, domestic cosmetics are required to provide efficacy evaluation and complete formula tables for registration, forcing brand companies to conduct in-depth and detailed research and development of formula functional ingredients, reducing false efficacy and conceptual additions. possibilities, increasing the research and development requirements for brand companies; on the other hand, regulatory authorities protect the core formula rights of cosmetics, so that the rights of brand companies with core formula patents are more effectively protected and a higher "moat" can be formed.

Due to the raw material submission code system, brands and raw material parties may tend to connect directly, reducing the cost of the intermediate distribution system, which will shorten the industrial chain and benefit leading raw material companies.

Currently, most of the cosmetic raw materials used by brands are produced and provided by international raw material manufacturers. International cosmetic raw material manufacturers have a global distribution system. Due to the complex and diverse types of cosmetic raw materials, brands tend to purchase multiple cosmetic raw materials through distributors. Therefore, manufacturers generally go through several layers of distributor channels when purchasing raw materials. However, the raw material submission code mechanism under the new cosmetics regulations will bind raw materials to cosmetic raw material manufacturers. The complexity of the submission code change procedure and the shortages caused by the change will make cosmetics brands less comfortable. Willing to change partners, prefer direct cooperation with raw material manufacturers to reduce related risks, resulting in streamlining of the entire distribution chain or even direct connection.

The value of raw materials has increased, brands have increased research and development, and raw material companies have accelerated their expansion.

Consumers: Increased attention to raw materials, and reduced industry information asymmetry.

Increased attention to raw materials, emphasis on formula ingredients, and weakened conceptual brand promotion effects.

In recent years, The functional cosmetics market at home and abroad is gradually emerging and has become a new round of growth potential for the cosmetics industry.The domestic functional cosmetics market will reach 28.3 billion yuan in 2021, a year-on-year increase of 18.2%, and the compound annual growth rate from 2012 to 2021 will reach 25.4%. In terms of brand marketing, young consumers represented by Generation Z no longer only pursue “appearance consumption” and brand effects, but pay more attention to ingredients and efficacy. It is difficult for a brand to win hearts simply by relying solely on conceptual marketing. According to the iResearch report, among the purchasing factors considered by Chinese beauty and skin care consumers in 2020, "ingredients and efficacy" accounted for 53.2%, ranking first. According to Weiboyi's "Social Media Marketing in the International Skin Care Industry" report, 64% of consumers will focus on the ingredient list when purchasing skin care products.

layers of efficacy evaluation, scientific certification, evaluation interaction, and industry information asymmetry reduced

Currently, consumers pay more attention to the authenticity and effectiveness of functional ingredient claims, and are more likely to trust skin care product efficacy ingredient query platforms such as Beauty Cultivation, and KOL evaluation videos etc., that is, paying more attention to the real effects of products, in-depth product reviews, knowledge popularization and other dry content. For example, the APP Beauty Practice, which provides cosmetic ingredients query and word-of-mouth review, was founded in 2017 and has reached 30 million+ users in 2020. Youmi Youshu report shows that among Douyin beauty experts in 2021, those with the attribute of planting grass and evaluation are more popular, accounting for the highest proportion, reaching 9.85%. In addition, consumers are more inclined to interact with top leaders or top KOLs and learn about the true efficacy of products through evaluation and interaction. According to the Crowley report, among the top 1,000 interactive content in Xiaohongshu reviews, beauty and skin care accounted for the highest proportion, accounting for 37%. Through evaluation interaction, consumers can more truly understand product information, and information asymmetry is reduced.

There have been many beauty bloggers with professional backgrounds on the Douyin platform, and consumers tend to have a more professional understanding of cosmetics. With the rise of the Douyin platform, a group of professional beauty bloggers have become popular. A large number of the anchors have professional backgrounds and have a deep understanding of the raw materials and mechanisms of cosmetics. The series of popular science they promote have made consumers’ understanding of cosmetics more specialization.

The query method for cosmetic raw materials endorsed by national regulatory agencies is more user-friendly and convenient. For example, the "Cosmetics Supervision" APP can easily query the relevant registration and filing information of any cosmetics, and it publishes short popular science articles to help consumers scientifically understand cosmetic products; in the "State Council" WeChat applet, "Cosmetics Inquiry" also appears in the convenient service column ” window, consumers can also make convenient inquiries.

R&D end: Competition is fierce, domestic patent concentration tends to increase, and leading companies have obvious advantages.

Global cosmetics R&D competition is becoming increasingly fierce. The United States is the number one source of technology, and L'Oreal Group is the leader.

From 2003 to 2012, the number of cosmetics patent applications remained unchanged every year. Steady growth of 6,000 pieces; from 2012 to 2018, the number of patent applications in the global skin care industry increased rapidly, from The number of applications increased rapidly from about 6,000 to nearly 110,000 per year; thereafter, the number of patent applications maintained steady growth from 2018 to 2022, with a slight decline. From 2003 to 2016, the number of patent authorizations has been growing steadily, and the authorization proportion has remained in the range of 50%-60%. In recent years, due to the patent review time, the authorization proportion has been lower than 50%.

In the five years from 2018 to 2022, most of the legal status of global cosmetics and skin care industry patents are in "under review" and "valid" status, of which 17,500 are in "under review" status, accounting for 46.06%, which is a relatively high proportion. Indicates that the industry is active in research and development; 11,600 items are in "valid" status, accounting for 31.20%. In the five years from 2018 to 2022, there were 33,800 invention patents in the global cosmetics and skin care industry patent types, accounting for 89.2%. The level of innovation in the cosmetics field is high.

In the past two decades, L'Oréal Group has ranked first among patent applicants in the field of cosmetics and skin care, with a total of 9,350 applications, far surpassing the second-placed Pacific Co., Ltd. Patent concentration is defined as the ratio of the patent applications of the top 10 applicants to the total number of patent applications in the field.It can be seen that the patent concentration in the cosmetics and skin care fields has been continuously decreasing in the past 20 years, with CR10 falling from 22.27% in 2003 to 8.49% in 2022, reflecting the increasingly fierce technological competition in this field.

my country's cosmetics field has active research and development, patent concentration is increasing, and leading companies have obvious advantages.

The number of cosmetics patent applications in my country has grown rapidly since 2008. In this year, the State Council issued the "National Intellectual Property Strategy Outline", which greatly promoted domestic innovation resources. utilization and active development of innovative activities. After 2012, my country's cosmetics and skin care fields have grown rapidly, and the innovation capabilities of the cosmetics industry have become stronger and stronger. On the one hand, this is due to the overall domestic innovation environment getting better and better; on the other hand, it also benefits from the development of the Internet. Major e-commerce companies The rapid rise of the platform has greatly promoted the consumption of cosmetics and also promoted the R&D and innovation activities of my country's cosmetics industry.

After 2019, the patent concentration in my country's cosmetics and skin care fields will increase significantly, with CR10 increasing from 5% to 13%, and the relative advantages of the industry's leading companies will gradually become more prominent. As of 2021, Proya has 201 patents, Bettany has 80 patents, Bloomage Biotechnology has 166 patents, and Shanghai Jahwa has 374 patents.

Brand owner: Pay more attention to raw materials, increase self-research and external cooperation

From the research and development of cosmetic raw materials to sales, there is a long and complicated process. Generally includes ① basic research + applied research stage: including basic scientific research and applied research such as chemistry, biology, and genetic engineering research; ② industrial standardization stage: including process standardization, product specification setting, documentation, standard compliance, etc.; ③ Commercial standardization: including preparation of market positioning of raw materials, delineation of target groups, trademark, packaging, product image design, etc.; ④ Channels and marketing stages segment, through designing marketing, selecting channels, and finally completing sales, and continuing to invest in research and development by realizing market-oriented benefits. Compared with international leaders, domestic cosmetics companies have a shorter development time and weaker capital accumulation, and their R&D construction generally has not yet formed a complete system. However, as the company continues to grow, the company continues to increase research and development, and the company's strength is rapidly improving.

Beitaini takes the extraction of Yunnan's characteristic plant active ingredients as the core and provides sensitive skin care products

① In terms of innovation of active raw materials, it is mainly based on plant active extracts. The company's original research and development was vertical and efficient, and it successfully created the main brand of Winona. Its efficacy focuses on sensitive skin, and its ingredients rely on several Yunnan specialty plants such as purslane and green thorn fruit. Ranked firmly at number one. Now the company is working on selecting active ingredients that can solve corresponding skin problems from more than 6,500 Yunnan specialty plants, and is also working hard to promote the formulation of plant raw material standards. In 2021, Bethany Research Institute independently/jointly successfully developed a variety of Bethany's exclusive active substances, such as physalis calyx extract, kidney tea extract, peony root bark extract, green thorn fruit ceramide, and Pu'er tea extract. The third-generation wrapped particles of green thorn fruit and green thorn fruit, and the source of Tengchong hot spring bacteria are ectoin and so on.

② In terms of the number of patents, as of 2021, Bethany has 80 patented technologies, including core technologies such as the preparation method of purslane extract and the industrialized preparation method of functional skin care products containing purslane extract, which can use The active ingredients of plateau characteristic plant extracts are used to prepare and produce sensitive skin care products. The sales revenue achieved with this technology accounts for more than 95% of the main business revenue.

③ In terms of R&D investment, Bethany’s R&D investment in 2021 reached 113 million yuan, a year-on-year increase of 78%, and the R&D expense rate reached 2.81%. In the

④ R&D team and platform, there were 236 Bethany researchers in 2021, accounting for 9.92% of the employees. Bethany cooperates with the Yunnan Provincial Government, Yunnan University, Yunnan Agricultural University, etc. to build a Yunnan characteristic plant extraction laboratory, focusing on realizing high-tech innovation of "basic theoretical research-application development-development of common key technologies for industrialization-industrial incubation-market" Full chain business.

At the end of 2021, the Yunnan Characteristic Plant Extraction Laboratory was officially awarded the license. It is a new R&D institution established as an independent legal entity with the approval of the Yunnan Provincial Party Committee and the Provincial Government. The company's wholly-owned subsidiary Yunnan Yunke took the lead in undertaking the construction work. 1) Integration of resources: The laboratory integrates resources from universities in Yunnan Province, and the Yunnan Institute of Materia Medica, Yunnan University, and Yunnan Agricultural University all participate in the construction. 2) Introduction of talents: The size of the first phase of the laboratory R&D team is expected to reach 100 people, including Bethany's existing core R&D personnel. At the same time, a "flexible + dual employment" mechanism will be used to introduce high-level scientific research talents at home and abroad, within a 5-year construction period. The R&D team size is expected to exceed 300 people. The laboratory uses Yunnan's characteristic plants as its research and development engine to support the future development of Yunnan's 100-billion-dollar characteristic plant industry. At the same time, focusing on the research and development of functional cosmetics, functional foods and medicines based on Yunnan's characteristic plants, it is expected to achieve technological breakthroughs in the future and bring a new growth curve to Beitaini.

Huaxi Biotechnology produces hyaluronic acid with microbial fermentation as its core, efficiently achieving large-scale production and technology premium

① In terms of raw material types, functional sugars and amino acids are the two major categories of substances as the research and development direction. Including hyaluronic acid, ectoin, GABA aminobutyric acid, collagen, heparin, chondroitin sulfate and other biologically active substances. In terms of the number of

② patents, as of December 31, 2021, the company has applied for 525 patents (including 422 invention patents), of which 166 have been authorized patents (including 85 Chinese invention patents and 4 foreign invention patents). It includes four core technologies, namely microbial fermentation to produce hyaluronic acid, microbial enzymatic digestion to produce low molecular weight hyaluronic acid and oligomeric hyaluronic acid, hyaluronic acid efficient cross-linking technology breakthrough and sodium hyaluronate injection terminal sterilization technology.

③In terms of R&D investment, Bloomage Biotech’s R&D expenses reached 284 million yuan in 2021, a year-on-year increase of 101%, and the R&D expense rate reached 5.75%. On the

④ R&D team and platform, Bloomage Biotech’s R&D personnel reached 571 in 2021, accounting for 18% of the total employees. Based on the existing two core technology platforms of microbial fermentation and cross-linking technology, Bloomage Biotech has established four independent R&D platforms including synthetic biology R&D platform, application mechanism R&D platform, formulation process R&D platform, and pilot transformation platform. . Cooperate with well-known domestic and international scientific research institutes to build the "Key Laboratory for Quality Control of Cosmetic Raw Materials" and the "Synthetic Biology Innovation Center" to achieve industry-university-research cooperation. Continuous investment in R&D has led to the gradual diversification of the R&D team. In addition, the company has established joint laboratories with domestic and foreign universities and scientific research institutions such as Harvard University, Tsinghua University, Jiangnan University, and Shandong University. Collaborate in molecular biology, cell biology, skin health, intestinal flora, tissue engineering application technology, etc., and conduct research on the efficacy mechanisms of bioactive substances such as hyaluronic acid.

Proya takes anti-aging function as the core to create a large single product matrix

①The raw materials are based on anti-aging active ingredients. Ruby essence mainly contains three core ingredients: 20% hexapeptide, 1% exclusive patented supramolecular retinol, and 3 layers of rare seaweed extract, which is positioned to fight against early aging. The double anti-aging essence contains 4 major ingredients, including ergothioneine, astaxanthin, carnosine and BASF's patented ingredient collrepair, to achieve antioxidant and sugar-clearing effects. In terms of the number of

② patents, the 2021 annual report shows that during the reporting period, 19 new nationally authorized invention patents were obtained, and 11 new invention patent applications and 10 appearance patent applications were submitted. As of the end of 2021, the company has 92 nationally authorized invention patents, 19 utility model patents, and 90 appearance patents, totaling 201.

③In terms of R&D expenses, Proya's R&D expenses reached 76.5837 million yuan in 2021, a year-on-year increase of 6.1%, and the R&D expense rate reached 1.65%.

④In terms of R&D personnel and R&D platform, the number of R&D personnel reached 159 in 2021, accounting for 5.59% of the company’s total population. The company has set up an international scientific research institute to conduct research and development of basic raw materials and a Hangzhou headquarters for formula application research and development. It also plans to further expand investment in research and development by establishing a new formula-related research institute in Shanghai and a makeup base and research institute in Japan in the future.After the company signed a strategic cooperation with BASF (China) Co., Ltd., the company has signed strategic cooperation agreements with DSM (China) Co., Ltd., Ashland (China) Investment Co., Ltd., Evonik Specialty Chemicals (Shanghai) Co., Ltd., Croda Chemicals ( Shanghai) Co., Ltd. signed a strategic cooperation agreement.

Raw material end: International leaders have obvious advantages, and domestic companies have increased investment to embrace development opportunities

International leaders have a clear advantageous position based on R&D innovation and formula support

BASF, DSM DSM, Symrise, Ashland and Hehe Croda is the world's leading specialty chemicals production and R&D company and a major supplier of international cosmetic raw materials. Among them, BASF has a complete product system, covering matrix, surfactants, technical & performance ingredients and active ingredients. DSM is mainly about technology & performance ingredients and active ingredients, mainly active ingredients. Symrise is based on fragrances and active ingredients. Ashland covers active ingredients and technical performance ingredients, focusing on technical & performance ingredients. Croda covers surfactants, technical & performance ingredients and active ingredients, mainly active ingredients.

BASF (BASF): complete raw material system, abundant raw materials and formulas, complete formula service support system

BASF is the world's leading supplier of personal care and home care industries, occupying almost most of the world's cosmetic raw material supply market, half of the world's Cosmetic brands are its customers. Chinese customers include Proya, Lafang Jahwa, Huanya Group, Shanghai Jahwa, etc. ① Personal care products are complete, covering four major categories. The top five raw materials are 117 active ingredients, 99 surfactants, 48 ​​emollients, 36 solubilizers, and 35 emulsifiers, accounting for 23% and 35 respectively. 18%, 9%, 7%, 6%. ② Provide active formula solutions based on the Care Creations® brand, committed to meeting the rapidly changing needs of customers and consumers. Currently, BASF has approximately 899 formulas, including 334 facial care products, 209 body care products, 148 hair care/shampoo products, 79 sunscreen products, 68 body wash products, 48 ​​hair styling products, and 2 oral care products.

③ It has strong R&D capabilities and provides a large-scale platform to support innovation. BASF’s Nutrition & Care division generated revenue of €177 million in 2021, a year-on-year increase of 10.8%. The R&D expense rate will reach 3% in 2021, and the R&D expense rate will basically remain stable at around 3% from 2018 to 2021. BASF has three interdisciplinary innovation platforms including Expression Genetics, Microbiome and Plant Material Extraction to research new concepts of active ingredients and commercial applications. At the same time, it provides digital and customized platform technologies, such as Emuage technology, D'lite digital platform and provides sun protection simulation calculator EcoSun Pass, etc.

DSM (DSM): a leading international cosmetic raw material company, focusing on active ingredients and fragrance ingredients. Providing flexible beauty solutions

DSM's international customers include Estee Lauder, Chanel, L'Oreal, Procter & Gamble, Unilever, Shiseido, etc., and domestic customers Households include Jialan, Pelaiya, etc. ① Provide active ingredients and technical & performance ingredients, mainly active substances and aroma ingredients. At present, the DSM official website is divided into 8 major sub-categories, with a total of 118 categories. The categories from high to low are skin bioactive substances (62 types), vitamins (17 types), aroma ingredients (15 types), sunscreen agents, and hair care conditioning polymers. QUALI® visual and sensory modifiers, visual and sensory modifiers, emulsifiers and multifunctional ingredients. ②Provide flexible beauty solutions. According to customer needs, we develop diversified and customized formulas and provide raw materials and ready-to-use formulas. In 2021, 40% of DSM's personal care and fragrance department's sales revenue came from solutions, such as pre-mixed formulas, market solutions, personalized customized nutrition solutions, etc. There are currently 221 formulas on the DSM official website. From high to low, they are facial skin care formulas (102 kinds), sunscreen formulas (49 kinds), hair care formulas (33 kinds), body care formulas (23 kinds), and makeup formulas (14 kinds). species) etc.

③ is committed to research and development innovation such as multi-functional ingredients. In 2021, DSM's nutrition department invested 257 million euros in research and development expenses, a year-on-year increase of 6.64%, and the compound annual growth rate from 2016 to 2021 was 4.63%.The R&D expense rate will reach 3.7% in 2021, and the department's annual R&D expense rate will be stable at around 4% from 2016 to 2021. The R&D system consists of a cross-regional network of five application laboratories (Europe, the United States, Brazil, China, and Singapore), providing compatibility testing, performance testing, sensory knowledge, and providing development innovation statements and product concepts to form complete formula support. system.

Symrise (Dezhixin): one of the four major international brands of flavors and fragrances, focusing on aroma ingredients and active ingredients.

In 2021, Symrise's fragrance and care department has locations in 30 countries and sales distribution in 135 countries. International customers include L'Oreal, Procter & Gamble, Johnson & Johnson, Dr. Shirono, etc. Domestic customers include Shanghai Jahwa, Jialan, Hanshu, Huanya, Xiangyi Materia Medica, Yunifang, etc. ①The product system is centered on aroma ingredients and cosmetic active ingredients. Symrise has 156 aroma components. Cosmetic ingredient products are divided into 7 categories, with about 120 types/series, including active ingredients (46 types), micro-protective ingredients (24 types), plant extracts (four series), performance ingredients (18 types), and hair care Ingredients (10 types), sunscreen ingredients (14 types), colorants (four series). Combined according to the four major categories in this article, the company has about 37 technical & performance ingredients and about 83 active ingredients. The technical & performance ingredients are only emulsifiers, emollients, thickeners and preservatives, and there are few varieties. The active ingredients are rich in functions, including special ingredients such as warmth, refreshing, anti-hair loss, and repair of oily skin sensitivity. ② Combining the advantages of raw material research and development, Symrise provides "Beauty+" cross-dimensional solutions and provides formula application support, such as sun protection + odor control and moisturizing; whitening agent + fragrance; perfume + skin soothing ingredients, suitable for sensitive skin.

③ It has strong R&D and innovation capabilities and is an innovative leader in the field of beauty ingredients. In 2021, the Symrise fragrance and care department invested 108 million euros in R&D expenses, a year-on-year increase of 4.55%. The compound annual growth rate of R&D expenses from 2016 to 2021 was 3.16%. The R&D expense rate is 7.25%, and the R&D expense rate remains above 7% from 2017 to 2021. The company has 5 research platforms in the fields of cosmetic ingredients, fragrance encapsulation and release systems, green chemistry for sustainable products, odor management and oral care, a global application network, consumer research, and an interdisciplinary team of cellular, molecular and microbiologists. Research strengths such as research groups.

Ashland (Ashland): covering technology & performance ingredients and active ingredients, focusing on technical performance ingredients and biological functional ingredients

The company's customers include formulators of large multinational brand consumer goods companies and small independent boutique companies. International customers include Estee Lauder, Dior, and Ocean Blue Mystery, etc., domestic customers include Proya, etc. ①The product system covers technology & performance ingredients and active ingredients. Preservatives and biofunctional ingredients are the most abundant, and cellulose and PVP have the highest revenue. According to the company’s official website, Ashland currently has about 154 products, the top three of which are preservatives (73 types), biofunctional ingredients (42 types), and thickeners (13 types). In terms of revenue, technical & performance ingredients such as cellulose and PVP account for a higher proportion of revenue. According to data from Ashland’s annual report, cellulose will account for 18% of revenue in the personal care department in 2021, and PVP revenue will account for 18%.

②The formula types are mainly hair styling and no-rinse skin care products. Ashland divides skin care products into two categories based on whether they require rinsing. Those that require rinsing include facial cleansers, scrubs, etc., while those that do not require rinsing include essences, creams, lotions, etc. According to the official website, Ashland currently has about 408 formulas, ranging from high to low, including hair styling (111 types), no-rinse skin care products (100 types), hair care (76 types), sun protection (37 types), etc.

③ has an innovative and scientific research and development platform and occupies a core position in the field of natural biotechnology. Ashland's total R&D expenses in 2021 are US$50 million, with an R&D expense rate of 2.4%. The personal care and home care division has 8 R&D centers and 13 manufacturing bases (located in the United States, France, Mexico, India, Germany, the United Kingdom, etc.).The company has a scientific and innovative platform in personal care and home care and occupies a core position in natural and naturally derived technologies, including related patented ingredients and proprietary sustainable technologies. (Source of the report: Future Think Tank)

Croda (Croda): covering surface activity, technical & performance ingredients and active ingredients, focusing on the three high-end beauty active fields of peptides, nature and biotechnology

① Rich product system, emulsifiers, cosmetics The largest variety of active substances and surfactants. In terms of specific products, emulsifiers, active ingredients and surfactants have the most diverse product categories, reaching 303, 276 and 147 respectively. In the three niche markets of peptides, nature and biotechnology for beauty actives, 80% of Croda's anti-aging products contain peptides, 80% of its newly developed products are green and natural, and 33% of its products are driven by biotechnology. and owns multiple biotech platforms. ②Provide formula solutions covering many fields. The company provides about 40 kinds of formulas, and the number of formulas in each category from high to low is body care, hair care, makeup, sun protection, and body care, reaching 18, 13, 6, 2, and 1 respectively. For example, the Crodarom series not only provides plant-extracted active ingredients, but also provides a complete set of formula service support systems. The business content includes: extracting plant active ingredients and making efficacy claims; the advantages of traditional and plant therapy knowledge, with literature catalog support; providing Plant concepts, pictures, product stories, and brand marketing support.

③ The raw material research and development system is mature and continuous research and development innovation is carried out. In 2021, Croda Group invested £59 million in research and development expenses, with an R&D expense rate of 3.11%. Newly developed and patent-protected products accounted for 44% of total revenue in 2021, a year-on-year increase of 6pcts compared to 2020. In 2021, the company has a total of 45 R&D centers and 579 partners, a year-on-year increase of 9%, which complements its own R&D system.

Domestic companies are expected to usher in share expansion opportunities

As some raw material patents of international companies have expired, and the epidemic has led to the instability of the leading international raw material supply system and a substantial increase in production costs and transportation costs, domestic companies are expected to usher in expansion opportunities. In recent years, raw material manufacturers such as Kesi Co., Ltd., Xinhan New Materials, and Tianci Biotech have been intensively listed on the market. With the help of capital market investment to expand production, introduce talents, and broaden their horizons, their reputation has increased and their status in the industrial chain has been enhanced.

As some raw material patents of international companies expire, domestic raw material manufacturers are expected to usher in opportunities to expand their market share. Specifically: ① For example, BASF's EHT and DHHB patents have expired, and according to the company announcement of Kesi Co., Ltd.'s related changes in raising funds in 2020-2021, Cosi Co., Ltd.'s subsidiary Ma'anshan Kesi has launched EHT, DHHB and other sun protection products. Application for production patents and construction of production lines for new agent products. Among them, RMB 10.2268 million has been invested in the EHT production line, reaching an annual production capacity of 1,000 tons. The DHHB (Cos calls it PA) production line will start construction in Q4 2021, with a planned investment of 72 million yuan to reach an annual production capacity of 500 tons, and is scheduled to be put into production in the first half of 2022.

(This article is for reference only and does not represent any investment advice on our part. If you need to use relevant information, please refer to the original text of the report.)

Selected report source: [Future Think Tank]. Future Think Tank - Official website