Core Viewpoint - The internal speech by Zhao Yan, chairman of Huaxi Biological, highlights the urgent need for organizational reform and accountability within the company, amidst significant performance declines and internal turmoil [1][3][5]. Financial Performance - Huaxi Biological reported a revenue of 5.37 billion yuan for 2024, a year-on-year decrease of 11.6%, and a net profit of 164 million yuan, down 72.27% compared to the previous year [4][12]. - The company experienced a significant drop in its core functional skincare product revenue, which fell by over 18% for two consecutive years, with a 29.74% decline in the first half of 2024 [12][24]. Internal Challenges - The company has faced a high turnover of key technical personnel, with seven executives leaving in the past two years, including core technical staff [10][11]. - Zhao Yan's speech indicated a crisis within the organization, with terms like "problems" and "reform" frequently mentioned, reflecting the urgency of addressing internal management issues [5][6]. Strategic Shifts - Zhao Yan emphasized a return to a "start-up" mentality, focusing on operational aspects and addressing the need for a more agile and responsive organizational structure [5][21]. - The company is undergoing a significant internal restructuring, which has already cost over 270 million yuan, raising concerns about its financial health and future profitability [11][17]. Market Context - The broader pharmaceutical and biotechnology industry has seen a total market value decline of 14.3% in 2024, indicating a challenging environment for Huaxi Biological and its peers [20][21]. - The medical beauty industry, once characterized by high growth, is now facing a period of adjustment, with competitors also reporting declines in net profits [18][21]. Future Outlook - Zhao Yan expressed excitement and caution regarding the integration of AI in the life sciences sector, suggesting potential for significant changes in consumer engagement and decision-making processes [18][24]. - The company plans to introduce new talent and possibly restructure its core team to enhance its operational effectiveness and restore investor confidence [25].
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