Since the promulgation of the regulations on the administration of efficacy of cosmetics on January 1, 2021, it has brought great changes to the supervision and filing of key raw materials. We have sorted out the key changes in the new regulations, mainly involving the registrant, raw material submission code and efficacy declaration. (1) Unified rights and responsibilities of registrants:
It is stipulated that the registrants and recorders of cosmetics shall be responsible for the quality, safety and efficacy claims of cosmetics. (2) Raw material submission code system: it is automatically generated after being submitted on the cosmetics raw material safety information registration platform and is associated with the raw material safety information file provided by the raw material manufacturer. Only one enterprise can be authorized for the raw material information of the same specification. (3) Cosmetic efficacy declaration system: from 2021, when applying for registration of special cosmetics or filing of ordinary cosmetics, raw material safety information, product efficacy evaluation report, safety evaluation report, etc. shall be provided (some materials are provided with a buffer period).
Brand side: leading companies with good compliance and strong R & D ability. Under the pressure registration and filing system of some small and medium-sized brands: head brands have their own registration and filing ability and are less affected; However, some small and medium-sized brands that do not have their own ability to complete registration and filing need to entrust agent factories for filing or rely more on agent factories, and their bargaining power is weakened. Under the cosmetic efficacy declaration system: (1) the short-term testing cost of the industry increases; Relevant materials shall be supplemented for existing products, and the registration and filing time of new products shall be extended accordingly; In the long run, it is conducive to the development of industry norms.
(2) for the head brand, its internal process is perfect and can complete the efficacy evaluation; The original products have strong compliance and are expected to be less affected; The frequency of new products is stable, so the impact is also limited. (3) For some small and medium-sized brands, their compliance is not perfect. If the original products do not comply, they will face the risk of off the shelf; Brands with high promotion frequency will also be greatly affected; At the same time, it also faces the pressure of testing cost. Under the raw material submission mechanism: the connection between the brand side and the raw material side will be closer, such as joint research and development to enhance competitiveness.
OEM factory & raw material side: the market share of the head OEM manufacturers is expected to increase, and the Chinese raw material side is expected to benefit. OEM factory: OEM mode: under the registration and filing person and efficacy declaration system, clear requirements are put forward for the production and operation qualification and production scale of cosmetics manufacturers. The original non-conforming small and medium-sized OEM manufacturers will face rectification, and the industry is expected to focus on the head in the future. ODM mode: ODM manufacturers can act as registrants of small and medium-sized brands, which brings bargaining power. Considering that the head brand may be more inclined to obtain the formula right in the game, for ODM enterprises, the product bargaining power based on R & D capability (i.e. improving the price of the brand to buy out the formula right) can also increase the production profit. Therefore, in the long run, improving R & D capability is the key for manufacturers.
Raw material side: Chinese raw material manufacturers are expected to benefit from the raw material submission system and cosmetic efficacy declaration system: (1) Chinese raw material manufacturers are relatively familiar with the submission process. (2) Stability: the replacement of raw material manufacturers involves the re filling of relevant data, filing, etc., resulting in time, testing and other costs. Under the background of the epidemic, the relative supply stability of Chinese raw material manufacturers is higher. (3) Overseas manufacturers’ willingness to report information will also be affected by compliance costs.
Investment suggestions: the industry supervision is becoming stricter, and the industrial chain leader is benefiting; Focus on top enterprises in subdivided fields (1) brand side: focus on recommending Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Proya Cosmetics Co.Ltd(603605) , Bloomage Biotechnology Corporation Limited(688363) , Lushang Health Industry Development Co.Ltd(600223) ; The beneficiary object is Shanghai Jahwa United Co.Ltd(600315) . (2) OEM & raw material Party: key recommendation Fujian Green Pine Co.Ltd(300132) ; The beneficiary objects are Jahen Household Products Co.Ltd(300955) , Nanjing Cosmos Chemical Co.Ltd(300856) .
Risk warning: repeated impact of epidemic situation; Increase of enterprise operating costs; Industry competition intensifies
