China's largest condom brand is up for sale

Recently, Renfu Pharmaceutical Group Co., Ltd. announced that its wholly - owned subsidiary plans to sell its 16.34% stake in Lifestyles Healthcare Group through a public listing. The minimum listing price shall not be lower than the appraised value of 1.056 billion yuan.

Speaking of Lifestyles, not many people may know about it. However, its most well - known brand, Jissbon, must be very familiar to people. And the only remaining stake in Renfu's hands is this part. After the transaction is completed, there will be no equity connection between Renfu Pharmaceutical and Jissbon.

The company said that the proceeds from the asset sale will be used for repaying interest - bearing debts, working capital and other production and business activities, which is conducive to optimizing the asset - liability structure and concentrating resources to develop advantageous niche areas. According to the announcement, as of the end of 2024 and 2025, the net assets of Lifestyles were 1.068 billion yuan and 1.289 billion yuan respectively; the current revenues were 2.8 billion yuan and 3.159 billion yuan respectively, and the net profits were 351 million yuan and 421 million yuan respectively.

In fact, in the past 20 years, Jissbon has been sold, bought back and then gradually sold again and again, going through a lot of twists and turns.

Why does a pharmaceutical company produce condoms?

Ai Luming, the founder of Renfu Pharmaceutical, is one of the first intellectuals who gave up the "iron rice bowl" to do business after the reform and opening - up. In 1993, Ai Luming founded Wuhan Contemporary High - Tech Industry Co., Ltd., which mainly engaged in urokinase business. In 1996, Ai Luming merged Yangtze River Pharmaceutical Factory, a state - owned enterprise with assets of 37 million yuan and net assets of nearly 3 million yuan, at a price of 3 million yuan. The company's development entered the fast lane.

In 1997, Contemporary Science and Technology was successfully listed on the A - share market and was renamed "Renfu Pharmaceutical". Ai Luming suddenly became the actual controller of the listed company. With its fentanyl - based anesthetic products, Renfu Pharmaceutical became the "King of Anesthesia in the A - share market" and occupied half of the domestic anesthetic and analgesic drug market.

As for the birth of Jissbon, at that time, the domestic condom market had just been liberalized. Previously, condoms had always been a monopoly product of the family planning commission, which made Ai Luming see new business opportunities, and the story of Jissbon began.

The brand Jissbon was actually first registered by Wuhan Renfu Technology Co., Ltd. (the predecessor of Renfu Pharmaceutical). It has been selling condoms in China since 1998. At first, they were produced in Malaysia and then moved to Thailand. In 2001, Jissbon Co., Ltd. was officially established. Renfu held up to 80% of its shares at most and was actually the controlling shareholder.

Jissbon happened to catch a good opportunity. From the late 1990s to the early 2000s, the Chinese condom market was basically a neglected corner. Consumers' concepts were relatively conservative, there were few sales channels, and people were a little embarrassed to talk about it openly.

Jissbon once did something very unusual. At that time, it operated condoms as a product that could be formally brand - built and marketed, rather than just a small box on the pharmacy shelf.

In 2001, as soon as Jissbon was launched, it won good market returns. Under Renfu Pharmaceutical's innovative marketing methods, Jissbon not only appeared in large supermarkets in China for the first time but also appeared on TV commercials. Just a few years later, Jissbon achieved an amazing annual net profit of 20 million yuan, making Renfu Pharmaceutical earn a lot.

In 2002, Jissbon started its internationalization strategy, selling its products abroad and establishing Jissbon (UK) Global Co., Ltd. A Chinese local brand had the idea of going global very early.

Over the years, Jissbon has been a very valuable asset in Renfu's hands, with good profits and a stable brand. In a sense, it reflected Renfu's development ambition at that time. It was no longer limited to the pharmaceutical field but expanded upstream and downstream on the basis of "fertility regulation" and included both drugs and daily necessities. Later, Renfu did a lot of things around this main line: investing in a ginger industrial park to open up the upstream of raw materials, planning a biotech industrial park, etc., all to build a longer chain for the fertility - regulation business.

Even today, among the top three in the domestic condom market. According to the list released by Brand 100, the top two Chinese condom brands are Durex under Reckitt Benckiser of the UK and Okamoto of Japan respectively. Jissbon, ranked third, is a genuine domestic brand and ranks first among domestic brands.

Sold three times and bought once

The twists and turns of Jissbon in 20 years

However, it is worth mentioning that in the past 20 years, Jissbon has actually been in a process of constant change.

The first sale was around 2005. It was reported that Renfu Pharmaceutical's capital chain was very tight at that time. Wang Xuehai, the then chairman of Renfu Pharmaceutical, later recalled that the company's asset scale was not large and there was not enough cash flow to increase the issuance of stocks or allot shares. If they didn't sell, there would be great pressure. "I had to sell my most beloved thing," Wang Xuehai said in an interview at that time.

After that, in 2006 and 2009, Renfu successively transferred about 75% of Jissbon's shares to Ansell, a giant in Australian latex protective products. The total amount of the two transactions was 162 million yuan. According to China News Network, Ansell later increased its controlling stake to 90%. Since then, Jissbon has become Ansell's condom business in China and has been integrated into the latter's global system.

Wang Xuehai always wanted to buy it back. The opportunity came in 2017. In May of that year, Ansell announced that it would sell its condom, lubricant and other businesses as well as some production plants to a Chinese M&A fund jointly established by Renfu Pharmaceutical and CITIC Capital at a price of 600 million US dollars. After this purchase, Renfu not only took back all the shares it had sold to Jissbon but also obtained Ansell's sexual health business outside China and owned a series of overseas condom brands such as SKYN, Lifestyles, MANIX globally. To undertake this work and go global, Renfu and CITIC Capital established Lifestyles Healthcare Group, a platform company, in Singapore.

The valuation is also worth noting. From the sale in 2006 to the repurchase in 2017, the overall valuation of Jissbon increased nearly seven times. The little darling of the past now costs a lot of money to buy. Wang Xuehai also said at that time that after taking it back, a sexual health business platform would be established and all existing sexual health assets would be included, and an opportunity would be sought for listing. This was the most perfect moment in the whole story. All the money was taken back, and they also wanted to take it public.

However, the perfect ending did not come. Instead, there was a third round of sales. In November 2020, Renfu made a third move, selling 40% of Lifestyles' shares to a consortium composed of Hillhouse Capital, Boyu Capital and PineBridge Investments at a price of 200 million US dollars. Renfu's reason was to "firmly withdraw from non - core business areas with no obvious competitive advantages or poor synergy benefits".

So far, Renfu still holds 16.34%. After the listing, the 20 - year cycle of selling, buying, selling again and finally selling out has finally come to an end.

If we look at the whole timeline, we will find a pattern: every time Jissbon is transferred, it is related to Renfu's financial situation. In 2006, they sold it because of lack of money; in 2017, they bought it back when they had money and confidence; in 2020, to reduce debt and cut expenses, they sold a part; and so far, they have cleared all the shares to recover funds and reduce debt.

The condom market is no longer good

If we look at the whole industry, we will find that Renfu can let go because the condom business has become very difficult.

By 2024, the capacity of the Chinese condom market will only be 15.6 billion yuan, a 25% decrease from 20.8 billion yuan in 2020, and it has been showing negative growth for four consecutive years, with an average annual decline rate of about 6%. It's not the fault of a single brand, but the scale of the whole industry is shrinking. The situation in the downstream is even more obvious. From 2020 to 2024, more than 78,000 condom - related enterprises in the country were deregistered, with an average of 17,300 closing down every year.

On the whole, this is a market with high concentration and stable leading brands. Durex dominates, accounting for about 40% of the domestic market share, mainly relying on its outstanding marketing ability; Okamoto and Jissbon follow closely, each accounting for about 10%. Together with brands like Beyrich, the top three can account for more than 80% of the share.

In such a situation, even though Jissbon is in the second - tier position, it is very difficult to surpass Durex because its marketing is restricted and the space for promotion is small. Small and medium - sized players have no chance to overtake on a curve. Its position is stable, but there is a real ceiling.

The most serious problem is the change in the demand - side structure. The birth rate is declining, the marriage and love concepts of young people are more open, and the number of single people is large. According to relevant data, the number of single people in China is close to 300 million, accounting for more than 20% of the country's population. All these reasons together have directly reduced the demand basis for condoms. In addition, the sales volume of the "domestic Viagra", Jinge, also decreased by 13.2% in 2024 compared with the same period last year, and the sales revenue decreased by about 20%.

This explains the problems hidden behind Lifestyles' "good - looking" financial report. Its gross profit margin is close to 60%, which sounds very profitable, but the net profit margin has always been low, and its ability to make money is actually not strong.

This is also a problem in the whole industry: the unit price is not high, the gross profit is not thin, but the growth has reached its peak, the expenses are high, and it is difficult to really realize the profit. For a pharmaceutical company that wants to focus on innovative drugs and improved drugs, a business with high gross profit, low growth and continuous shrinkage has less and less strategic significance.

However, there are still bright spots in other aspects of the industry. The demand has not disappeared, but has shifted to other areas - related tracks such as sex toys and private care are also on the rise. For example, Yintima, a female private care brand under Reckitt Benckiser, achieved sales of more than 180 million yuan after entering the Douyin platform for a year and a half; the scale of the entire female private care market reached 32.27 billion yuan in 2022 and is expected to reach 48.49 billion yuan by 2027. However, these opportunities may not necessarily belong to traditional condom brands like Jissbon.

This article is from the WeChat official account "Rongzhong Finance and Economics". The author is Wang Tao, and the editor is Wu Ren. It is published by 36Kr with authorization.