Decoding the Business Model of Hair Loss Drug Company Mandi's IPO: Sales Expenses are 6 Times R&D

3SBIO (1580.HK) made a 500 million yuan investment 10 years ago, which has now yielded nearly 10 times the return.

This investment originated from the acquisition of Mandi International (hereinafter referred to as "Mandi") by 3SBIO in 2015.

According to the post-investment valuation from the Series A financing in November 2025, Mandi's valuation has reached HKD 5.8 billion, nearly 10 times the acquisition price from 10 years ago.

There may still be room for growth in valuation, as 3SBIO is currently planning to spin off Mandi for a listing on the Hong Kong stock market.

Mandi focuses on the hair loss market, with its core product being minoxidil solution, which has already surpassed 1 billion yuan in revenue. In 2024, revenue and net profit are projected to be 1.455 billion yuan and 390 million yuan, respectively.

Mandi's main strategy is to drive sales of a series of hair loss products, including minoxidil solution, through marketing—sales expenses in 2024 are six times the R&D expenses.

Behind the substantial revenue scale, Mandi still faces a major concern: the revenue growth of its flagship product, minoxidil solution, has shown a downward trend, and new products have yet to support Mandi's revenue growth.

With this IPO, Mandi is expected to further supplement its arsenal for new products in weight management and skincare.

Intensifying Marketing Efforts

Mandi focuses on the hair loss market, with the core ingredient being minoxidil.

This is one of the mainstream active ingredients for treating hair loss. Currently, the main drugs for treating androgenetic alopecia in China include minoxidil, finasteride, and spironolactone.

Compared to the other two drugs, minoxidil's advantage lies in the fact that it is the only treatment applicable to both men and women, and its side effects are relatively controllable.

For example, finasteride was approved by the FDA in 1992 and 1997 for the treatment of benign prostatic hyperplasia and hair loss, and its basic principle is to inhibit the activity of 5α-reductase, blocking the conversion of testosterone to dihydrotestosterone, thereby reducing the concentration of dihydrotestosterone in the body and improving hair loss. However, the accompanying side effects include decreased libido and erectile dysfunction due to the lowered concentration of dihydrotestosterone, with an incidence rate of about 5%.

Although the domestic drug regulatory agency has approved over 30 types of 2% minoxidil products and more than 40 types of 5% minoxidil products, Mandi still maintains its position as the market leader, with a market share of 53.3% for its minoxidil solution in 2024.

In 2024, the revenue generated by Mandi's 5% minoxidil solution reached 991 million yuan, accounting for nearly 70% of total revenue.

The unique competitive advantage of Mandi's 5% minoxidil solution that allows it to stand out among similar products lies in its first-mover and channel advantages.

On one hand, Mandi launched China's first 5% minoxidil solution as early as 2001, which has a history of over 20 years and possesses a strong first-mover advantage in the domestic market;

On the other hand, Mandi continues to intensify its online presence, with the revenue share from this channel jumping from 55.2% in 2022 to 72.3% in 2024.

To further explore online growth opportunities, Mandi's parent company, 3SBIO, plans to expand its online layout from traditional e-commerce platforms like Alibaba and JD.com to new e-commerce platforms like Douyin Mall and Xiaohongshu From the data on sales expenses, one can glimpse Mandi's emphasis on marketing.

From 2022 to 2024, Mandi's sales expenses were 476 million yuan, 548 million yuan, and 634 million yuan, respectively, accounting for nearly 50% of its revenue.

In contrast, Mandi's investment in research and development is relatively limited, with R&D expenses in 2024 amounting to only 92 million yuan, about 1/6 of its sales expenses.

In this IPO, Mandi plans to allocate the raised funds primarily towards the iteration of digital operation models, marketing and brand building, as well as expanding online channels, while also further expanding its sales team.

Brand building is indeed significant in the field of hair loss treatment.

Patients need to use minoxidil solution for a long period to see results. According to the "Guidelines for the Diagnosis and Treatment of Androgenetic Alopecia in China," the average onset time for minoxidil is 12 weeks, and it is recommended to evaluate efficacy after 3-6 months of use, with an efficacy rate of 50% to 85%, achieving optimal efficacy after about one year of treatment.

This means that the usage habits and brand trust formed by early users during the long-term medication will bring a certain degree of user stickiness.

Striking Out in All Directions

Mandi's increased marketing efforts and controlled R&D expenses may also reflect the resource allocation strategy of its parent company, 3SBIO.

3SBIO also has assets such as innovative drugs and CDMO that require substantial R&D expenditures, in which Mandi plays more of a "cash cow" role.

In 2022, 2023, and the first half of 2025, Mandi distributed dividends to shareholders of 250 million yuan, 400 million yuan, and 770 million yuan, respectively, accounting for 124%, 117%, and 443% of the net profit during those periods.

However, behind Mandi's increased marketing strategy, there are still many challenges lurking.

Currently, the performance of the core product, minoxidil solution, is accelerating its decline. In 2024 and the first half of 2025, revenue decreased by 10% and over 25% year-on-year, respectively.

Mandi urgently needs new products to fill the gap.

Currently, Mandi is expanding its product range from hair loss to skin care, weight management, and other categories, seeking more possibilities.

In the field of skin care products, Mandi has introduced medications such as Clindamycin cream for the treatment of acne and D2501 for the treatment of vitiligo, but none have been launched yet.

Clindamycin cream and D2501 are expected to submit market application and clinical trial application in 2027.

In the weight management field, Mandi has introduced semaglutide injection from Hanyu Pharmaceutical, which is expected to submit a drug registration application in the first half of 2026.

However, given the ongoing intense competition in the GLP-1 weight loss drug market, the prospects for Mandi's semaglutide injection remain challenging.

The products for treating hair loss still hold the most growth potential.

In 2024, Mandi improved the formulation of minoxidil solution and launched a 5% minoxidil foam, which generated revenue of 283 million yuan in the first half of 2025, a year-on-year increase of over 300%.

Currently, the 5% minoxidil foam still holds a certain exclusive position, being the only domestically approved minoxidil foam on the market and the first and only approved foam drug in the field of chemical pharmaceuticals in China Can the 5% minoxidil foam take over from the minoxidil solution? This may be the key to Mandi's performance growth.

With this spin-off, Mandi is expected to continuously supplement its research and introduce new drug categories.

10 Times Investment

In fact, this is not the first time 3SBIO has spun off its assets.

As early as 2019, 3SBIO spun off its innovative drug company 3SBIO Guojian (688336.SH) to list on the STAR Market. Thus, Mandi is expected to become the third listed company under the "3SBIO system."

However, Mandi is not an asset incubated by 3SBIO itself.

In 2015, 3SBIO acquired 100% of the shares of Mandi's predecessor, Zhejiang Wansheng Pharmaceutical Co., Ltd. (hereinafter referred to as "Mandi") for 528 million yuan. At that time, what they valued was Mandi's layout in nephrology and oncology.

"The outstanding capabilities of 3SBIO in biotechnology and Zhejiang Wansheng's (Mandi) expertise in small molecule production will provide a more complete new drug research and development platform for the merged group. Zhejiang Wansheng's existing product portfolio includes six commonly used anti-diabetic and antihypertensive products for chronic kidney disease patients. In addition to our existing nephrology product portfolio, these products will expand our product supply in the dialysis market. Since Zhejiang Wansheng has six approved oncology products, this acquisition will also expand our oncology drug portfolio," said Lou Jing, the actual controller of 3SBIO.

However, with the subsequent integration, 3SBIO discovered Mandi's potential in the field of hair loss and promoted the minoxidil solution to make strides in e-commerce and other channels.

"After 3SBIO acquired Zhejiang Wansheng, while sorting out Wansheng's product line, we found that Mandi's consumer product would have significant market potential," Lou Jing stated.

In November 2025, Mandi's Series A financing post-investment valuation reached HKD 5.8 billion, equivalent to RMB 5.3 billion, nearly 10 times the acquisition price of 500 million yuan ten years ago.

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