This is marketing research on the cosmeceuticals industry and can include information on the background, market structure, definitions, competitors, trends and developments of cosmeceuticals and is related to other topics such as personal care, skin care, cosmetics and pharamceuticals.

Table of Contents

Background

The “Cosmeceutical” market is the fastest-growing segment of the personal care industry. As a result of society’s fascination with maintaining a youthful appearance and the global population's increasing median age, this market is expanding at an accelerated rate. Like cosmetics, cosmeceuticals are topically applied, but they contain ingredients that influence the biological function of the skin. Cosmeceuticals improve appearance, but they do so by delivering nutrients necessary for healthy skin.

Market Structure

Cosmeceuticals are a marriage between cosmetics and pharmaceuticals but manufacturers cannot maintain that a cosmeceutical product has drug-like qualities. In such case, it is no longer considered a cosmeceutical but a drug, which requires review and approval for distribution by regulatory bodies such as the Food, Drug, and Cosmetic Act (FDA) in the U.S. and regulatory agencies in the EU countries. While the FDA does not recognize the term "cosmeceutical," the cosmetic industry uses this word to refer to cosmetic products that have medicinal or drug-like benefits.

The FDA defines drugs as those products which cure, treat, mitigate or prevent disease or that affect the structure or function of the human body. So, while drugs are subject to a review and approval process by FDA, cosmetics are not approved by the FDA prior to sale. If a product has drug properties (Botox), it must be approved as a drug. In contrast, cosmeceuticals do not require regulatory approval and consumers can purchase them without a prescription.

Examples of popular cosmeceuticals include the following:

• Moisturizers
• Retinoids
• Antioxidants
• Depigmentation agents

In general, vitamins, herbs, various oils, and botanical extracts may be used in cosmeceuticals, but the manufacturer may not claim that these products penetrate beyond the skin's surface layers or that they have drug like or therapeutic effects. For cosmetic labels, no division between active ingredients and other ingredients is required; they are all listed together.

Market Metrics

The United States is the world's largest cosmetics market, valued at US $45.4 billon, followed by Japan at US $21.9 billon, France at US $12.1 billion, Germany at US $11.6 billion, the UK at US $10.1 billion, and Italy at US $8.5 billion.

Overall, growth in skincare cosmeceuticals in the United States outpaces that of Europe. Between 2006 and 2011, the U.S. market for cosmeceutical skincare is forecast to grow from US $3.5 billion to US $4.5 billion with a predicted compound annual growth rate of 5.5%, compared to only 4.9 percent in Europe.

Demand in the U.S. for cosmeceuticals - loosely defined as cosmetic products that have medicinal or drug-like benefits - is projected to increase 8.5% per year to more than $8 billion in 2010. The skin care segment within the cosmeceutical market will reportedly account for 60 percent of all cosmeceutical demand by 2010.

The anti-aging products sector and increased mass-market distribution of prestige products are the primary drivers of the U.S. cosmeceutical market. For instance, retail sales of skin care products, which include both mass and prestige products, grew by 4.8 percent to $5.8 billion in 2005 from 2004. Additionally, retail sales of anti-aging products increased 4.4 percent to an estimated $505 million. It is anticipated that sales of other skin care products with the exception of facial cleansers such as moisturizers and hand and body lotions will follow a similar growth pattern.

With respect to increased mass-market distribution of skin care products, mass retail sales (excluding Wal-Mart) of anti-aging skin care products rose 15 percent between 2001 and 2005. It is anticipated that that anti-aging skin product sales in this channel will have a compound annual growth rate of 11.3 percent through 2010.

The foundation of the anti-aging segment's double-digit growth is in the development of new and formulation-improved cosmeceutical products. Skin care will reportedly account for 60 percent of all cosmeceutical demand by 2010.

Between 2001 and 2006, nourishing and anti-aging products was one of the fastest growing sub sectors within the global cosmetic market, growing 99 percent to reach sales of $12.7 billion. The U.S. market value for nourishing and anti-aging products for skin care is forecasted to reach $2.6 billion in 2011, a 24 percent growth from last year's estimate of $2.1 billion. Last year's total value of U.S. facial care products, which include moisturizers, anti-agers/nourishers, cleansers, toners, face masks and lip moisturizers, was estimated at $5.87 billion and is forecasts to reach $6.1 billion in 2011.

Skincare cosmeceuticals account for around 80 percent of the total U.S. and European cosmeceutical market. Professional products - cosmetic products that are doctor-endorsed or are sold in clinics/spas - are said to have the fastest growth among cosmeceutical products. Physicians and spa professionals, however, now face stiff competition from retail channels such as drugstores and other mass merchandisers. For instance Procter & Gamble recently acquired the Doctor's Dermatologic Formula skin care line. A large company such as P&G has the financial means to market and sell products and support a business in a way that doctors and spas are unable to do on their own.

The professional skin care product market had estimated sales of US $870 million in 2005, representing more than five straight years of double-digit growth. Sales through the medical channel have grown by more than 17 percent from 2005, a boost that helps mitigate a decline in the number of cosmetic procedures performed by physicians.

By 2011, the U.S. skin care market value is forecasted to reach US $8 billion from an estimated $7.78 billion in 2005. Global skin care sales are projected to grow by 25 percent to reach US $69.6 billion in 2010 from 2005. Anticellulite body care and anti-aging products will continue to be a key source of dynamism in the longer term. Moreover, the cosmeceutical market will be faced with intense pricing competition due to the growing market penetration of private label cosmeceutical brands and the rapid commercialization of innovative ingredients and products.

Industry Players

There are approximately 400 cosmeceutical manufacturers, which include the companies that supply the cosmeceutical chemicals and/or manufacture the product in the U.S. market. Of these, the top seven suppliers are BASF, Cognis, DSM, Merck, Allergan, Eastman and Croda and together they had about 45 percent of the US market in 2005. Additionally, the top six suppliers for finished products in 2005 were Procter & Gamble, Johnson & Johnson, L'Oreal, Estee Lauder, Avon and Allergan, which together held nearly half of the US market. The key distributors include Procter & Gamble, Johnson & Johnson, L'Oreal, Estee Lauder and Avon. These companies only distribute the finished cosmetically within the market.

• Croda International Plc Goole, based in the UK

One of the key suppliers in the cosmeceutical industry. The company had sales of $1.016 billion in 2006. Croda International sales primarily stem from oleochemicals -- derived from natural oils -- used in personal care products, household items, and the plastics industry. For example, wool grease or lanolin and its derivatives are used in nearly every cosmetic from lipstick to moisturizers. The rest of the company's sales come from industrial chemicals used in adhesives and oil drilling, as well as chemicals such as fats and emulsifiers that are used in foods. In addition, Croda's products have such varied end uses as rust preventatives and explosives.

• Allergan, based in Irvine, California

Manufacturers as well as supplies cosmeticians. In 2006, Allergan had sales of $3.1 (bllion in 2006. The company is a leading maker of eye care and skin care products and also produces and sells the popular pharmaceutical Botox. Botox was originally used to treat muscle spasms (as well as eye spasms and misalignment) but has found a more popular application: diminishing facial wrinkles. Allergan's eye care products include medications for cataracts, glaucoma, and pink eye, as well as eye and contact lens moisturizers. Additionally, the company's skin care products include treatments for acne and psoriasis. Allergan's Inamed subsidiary sells implants used in breast augmentation and weight-loss surgery; other products include dermatological gels.

• Procter & Gamble Company, Ohio, USA

One of the leading personal care products company in the world with 2006 sales of $76.5 billions. P&G's business is divided into three global units: beauty, health and well being, and household care. It also makes pet food and water filters and produces soap operas (As the World Turns). More than 20 of P&G's brands are billion-dollar sellers, including Actonel, Always/Whisper, Braun, Bounty, Charmin, Crest, Downy/Lenor, Folgers, Gillette, Iams, Olay, Pampers, Pantene, Pringles, Tide, and Wella, among others. Its purchase of Gillette in late 2005 was its biggest acquisition in company history.

• Avon Products, Inc., New York, NY

The world's largest direct seller of cosmetics and beauty-related items. The company’s sales stem primarily from direct-to-consumer selling. Nonetheless, additional sales are derived from its catalogs, mall kiosks, a day spa (Avon Salon and Spa in New York), and a Web site. Avon products include cosmetics, fragrances, toiletries, jewelry, apparel, and home furnishings. Avon has signed approximately 5.3 million independent representatives and launched a multiyear, four-part restructuring in late 2005. Its 2005 sales were $8.7 billions.

Trends and Recent Developments

As the cosmeceutical market continues to grow, there will be increased demand for cosmeceutical chemicals. This will result in more cosmeceuticals with chemicals such as botulinum toxin - the key ingredient in Botox, and hyaluronic acid professional products (doctor-prescribed and clinical/spa products) segment. Demand for other chemicals such as amino acids and antioxidants ingredients, which are used in many anti-aging creams and lotions botanical extracts and serve multiple cosmeceutical functions, are also expected to rise.

As the cosmeceutical industry continues to grow, the cosmeceutical chemical market is anticipated to grow about 8% annually between 2006 and 2010. By 2010, the cosmeceutical chemical market is projected to be worth approximately US $1.2 billion.

Sources

FDA

eMedicine

Wikipedia

Factiva

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