It’s a SMALL and beautiful world! (Revised Version)

Is it still a small world after all?

Global cosmetic retail sales figure is keeping its upward trend. The report from Marketandmarkets (n.a.) forecasted global cosmetics market value worths $635.7B in 2019. To be a winner, company have to dig in product innovation and ensure strategic fit for adapting the fast developed market demand and change. Nowadays, the global trend in the cosmetic industry is still in the stage where players foucs on 'medicinally' active cosmetics development. Cosmeceutical products are then taken advantage of an opportunity to bloom in the market. It is not a new story to tell that cosmetics industry has widely adopted nanotechnology in R&D. Even the world largest cosmetics company L’oreal devoted big money to obtain patents in nanotechnology. What does it imply for? According to Hove (2014), to transform the company to become more innovative and create a culture of continuous innovation that enables strategic renewal - Clear purpose of innovation or creativity, make it happens and stick in company are the key factors to become the champion in this keen competitive industry. Let’s have a ride inside this small world.

How this SMALL thing changed the world?

Nanotechnology is the innovative science and technology conducted at the nanoscale, which is about 1 to 100 nanometers.

Can’t imagine how small is “nano”?

In the International System of Units, the prefix "nano" means one-billionth, or 10-9; therefore one nanometer is one-billionth of a meter.

Indeed, nanotechnology involve the ability to see and to control individual atoms and molecules and everything on Earth is made up of atoms—the food we eat, the clothes we wear, the buildings and houses we live in, and our own bodies.

The laughers in NANO revolution

Franchina, Cosmetics Europe president stated that “Nanotechnology are one of the most active, and probably in the future will be one the most successful elements that can allows cosmetics to be absolutely effective” (Yeomans. M, 2012). The most frequently usage of nanotechnology in cosmetics industry is application of nanoparticles, especially for sunscreen, moisturizing and antiaging products. “Nano” - a magic word, which can draw people attention to and believe on the beauty products which incorporated with this word.

The latest innovation of nanotechnology brings a new breakthrough in the personal care as well as cosmetics industry. Such emerging new technologies of nanotechnology in cosmeceutical preparations better improved the functionality of the products on the biological level. It increases the active ingredients and aesthetic appeal of cosmeceutical products with prolonged effects. 

                             Nanotechnology in cosmetics

Since the first nanomertic cosmetic products developed at Shiseido in Japan 1991, Lancôme then adopted such new technology as essential in 1999. Afterwards, lots of cosmetic brands followed the new trend and come up with nanoformulations such as Chanel (Solution Destressante Precision) and La Prairie (Cure Intensive Aux Extraits de Caviar).

From traditional to NANO

Chemical ingredients such as Zinc oxide (ZnO), titanium dioxide (TiO₂), Liposomes and noisome are used in various cosmeceutical products such as sunscreens, moisturizers and anti-aging products. Beneficial from the advanced nanotechnology, the “Nano-version” of these chemical ingredients, known as nanoparticles, delivers a better performance in formulation, delivery and penetration.

The application of nanotechnologies enhanced the functionality and aesthetic appeal of various cosmeceutical products. For example in the sunscreens, unlike the traditional white thick sticky appeal, nanoparticles form a better UV filters and improve the aesthetic appeal with less greasy and smelly. With finer structure, nanoparticles can better transport the beneficial compounds deep into the skin in high concentrations.

                              Solid lipid nanoparticle

Delivery and penetration enhancer

Nanotechnology brings the possibility to tailor the essential structures of materials at the nanoscale for achieving specific functions. From the perspective of manufacturers, by controlling shape and size at the nanometer scale, companies can optimize the manufacturing conditions for skincare formulation and the components transfer so as to improve functionality and durability of their products.

The tears behind the innovative science

Despite the great enhancement of nanotechnologies, the potential unintended consequences  to human health and the environment are yet to be studied and discovered.

With the high penetration and prolonged effects of nanoparticles used in cosmeceutical formulations, long-term effects of the chemicals being generated in the skin cells are still uncertain.

Researches and studies are conducted to study the risks and the negative effect of nanotechnology applied in cosmeceutical products. Different researches showed that using the cosmeceutical products with Nanoparticles on skin can have toxic effects if reaching to blood stream and can produce free radicals and cause cell toxicity when exposed to UV light. Besides, nanoparticles are also concerning for contaminate water and create harmful impact to the environment.

In order to monitor and evaluate the side effects, U.S. Food and Drug Administration published the first draft guideline in 2011, then published two new draft guidelines in Apr 2012 for manufacturers of food substances and cosmetics. Also, starting from 11 July 2013, all ingredients present as nanomaterials have to be indicated on the package with the term ‘Nano’ in brackets under EU cosmetic regulation. Indeed, the safety issues of nanotechnology application in cosmetic products is constantly under review by different regulatory bodies worldwide.

In view of such breakthrough, innovative companies would compete to take the first-dip advantage to incorporate such emerging technology in their cosmetics products. Beneficial of small and fine nanoparticles with high penetration, products can be greatly enhanced and promoted. Nevertheless, these tiny nanoparticles also can slip through skin layers and potentially interact with immune system and bloodstream, and possibly become toxic and damage issues, such side effects are still under investigations.

On one hand, the application of nanotechnology enhances the efficacy of cosmeceutical products for consumers’ benefits. But on the other hand, the risk of such incorporation may create potential hazards to human health and environment. Undoubtedly, it would be an importance topic for scientists and companies to seek for the balance in between for maximizing the benefits and minimizing the negative impact when implementing this advanced technology on their products.

Opportunity: Analysis on the multi-billion dollar cosmeceutical market

Figure 1

Figure 2

From figure 1 & 2 which shown that he market size for general cosmetics projected to increase by 25% from 2012 to 2017 while cosmeceuticals will increase by more than 46% from 2012 to 2017 reaching $47 billion, making cosmeceuticals one of the most dynamic sectors within the cosmetics and personal care markets.

Figure 3

The desire to maintain a youthful image combined with the affluent women population in these countries and rising employment rate amongst women segment of the population. Furthermore, the market share of men’s cosmeceutical products is starting to be significant, the first major wave of men’s skin care products appeared in the mid-1990s and men are no longer embarrassed to shop for creams or show their desire to look young.

The generations X & Z are more opened to the use of cosmeceutical products than older generation, therefore, the cosmetic companies would target the age group of 15 years to 40 years, especially people within this age group want to be more attractive and are more conscious for their looks. The future of cosmeceutical products in an emerging global market is likely to showcase favorable growth.

The cosmeceutical industry is based on the development and marketing of products that lie between cosmetics and pharmaceuticals. Today, there are over 400 suppliers and manufacturers of cosmeceutical products, and the industry is estimated to grow by 7.4% by 2012.

According to the article “Nanoparticles found in 10 top brand cosmetics” (Dec 2009) has found nanoparticles in foundations and concealers sold by 10 top name brands including Clinique, Clarins, L’Oréal, Revlon, The Body Shop, Max Factor, Lancôme Paris, By Terry, Yves Saint Laurent and Christian Dior.

• Concealers, foundations and mineral foundations sold by 8 leading brands contained particles measuring less than 100nm in size (Clinique, Clarins, L’Oréal, Revlon, The Body Shop, Max Factor, Lancôme Paris and By Terry)

• A further 2 products contained particles that measured 100nm (Yves Saint Laurent and Christian Dior)

The future for beauty-from-within functional cosmetics that offer multifunctional benefits in area of anti-oxidant cellular protection and skin health with delaying, defying and anti-aging properties which would be great business potential for various cosmetic giants to develop cosmetics with science behind the use of nanotechnology.

Pitfall in the adoption of nanotechnology in skin care industry

The use of nanomaterials in cosmetic dermatology is the subject of

l   Growing public concerns around the health and environmental risks of using nano-ingredients in sunscreen and cosmetics.

n   Keen discussions on the safety of nanomaterials in cosmetic dermatology indicates that some risks are inevitable, although conventional toxicological methodologies are not adequate to assess their safety

n   The leader of CSIRO’s Nanosafety group has warned that in a worst-case scenario, nano-ingredients in sunscreens could cause skin cancer

l  Efforts to establish fundamental rules for use of nanotechnology in skin care product

l   Risk assessment are ongoing throughout universities, government laboratories and industry

l   The need for legislation that includes a more comprehensive science-based definition of nanomaterials, together with a clear assignment of liability to producers and employers arising from the use of nanomaterials, through all routes of exposure (such as inhalation and the skin)

l   Promotion on integrated, safe and responsible nanoscience and nanotechnology research for the benefit of society as a whole

n   labelling clear ingredients that people can have their choice to opt for nano-free skin care product

 

It involves a trade-off between benefit on cosmeceutical product for skin rejuvenation and risk on influencing the skin’s biological function, relevant companies should conduct more sophisticate research to ensure the safety level of product besides only focus on developing new anti-aging science and technique.

L’Oreal - The Trendsetter

L’Oreal is a well-known French cosmetics and beauty company founded by scientist Eugene Schueller in 1909. The group owns 32 international brands, and sells products to customers in 130 countries with a revenue of EUR 23 billion in year 2013.

As a trendsetter who is steadfast in its focus of innovation and enthusiastic in all new ideas and disruptive technology development. It has been faciliated through strategic alliance and partnership with industrial experts.

L’Oreal teamed up with Organovo to produce 3D bio-printed human skin tissues, and nanofibre in 3D design has also attracted tissue engineers to dig into. These technologies are allowing L’Oreal to reliably test topical products for human use without the need for animal testing  and testing toxicity of skincare products since October 2014 (“Our 3D,” 2015 & Utroske, 2014).

It is also keen on explore innovation intelligence in academic platforms through the collaboration with selected universities. E.g.

> worked with Standford University for the discovery of probiotic for skin (CNW, 2007)

> worked with Zayed University for “For Women in Science Program” (Zayed University, 2014)

> worked with Hong Kong University Pasteur Research Centre for the launch of “L’Oreal Research Scholarship” (HKU Pasteur Research Centre, 2012)

All the partnerships contribute to the development of scientific research by encouraging the exchanges of ideas and nurturing scentists who aspire to pursue their career in this specific area. L’Oreal’s attitude has nurtured a culture for innovation and continual learning.

French Beauty Giant

The group upholds its vision – “Together we will make beauty sustainable. Together we will make sustainability beautiful”. To accomplish this ultimate goal, all members implement its mission - “Provide the best in cosmetics innovation to everyone around the world” by leveraging its expertise in innovation and strategic acquisition to offer the best cosmetics to its customers all over the world. 

Norm of Innovation

The Dynasty of Acquisitions

The beauty giant owns as many as 32 international brands as of 2014, but only 3 of them were created by L’Oreal itself (L’Oreal 2013). This strategic approach has successfully expanded its boundaries of expertise, diversified the group’s portfolio, enriched its customer base, and captured revenues for its sustainable growth. The acquired companies would be be included as part of the L’Oreal’s network of international research and innovation aiming at the same goal with all other L’Oreal group members. The acquisition of Pureoloy, which used nanotechnology for the production of professional hair products, in 2007 has not only generated 14% of the total revenue ot the group, but more importantly, it has contributed to L’Oreal’s study and investigation on nanotechnology (Bidness Etc, n.d.). Strategic acquistion thus serves as a key element compiling an all-rounded R&D system of the group. 

L’Oreal’s Strategic Acquisition since 1960’s

(Source: http://magazine.loreal-finance.com/en/how-loreal-enriches-and-completes-its-brand-portfolio.htm)

The pioneer of nanotechnology

Nanotechnology is praised to be the future of cosmetics industry, and L’Oreal’s as the trendsetter has been devoting itself to scientific research and prides itself as the pioneer in the area of nanotechnology development - it is the top nanotechnology patent-holder in the United States (wiki, n.d.). It is also a founding member of International Council on Nanotechnology and participant of the NANOINTERACT Project of the European Union studying the interactions between nanotechnologies and human living world (L’Oreal – Sustainability Factsheet, 2010).

As nanotechnology as one of the numerous disruptive technologies and research areas focused by the company, it is one of the driving forces encouraging the significant expenditure in the R&D area – L’Oreal’s budget allocated to research and innovation has been significantly increasing from EUR 680 million in 2012 to EUR 761 million in 2014. With its strategic planning and positioning in the research and innovation expertise, the group has successfully registered 551 patents in 2012, 564 in 2013 and 501 in 2014.

“The top priority of L’Oreal Research is to prove scientific benefit and to guarantee safety”, says L’Oreal (L’Oreal – Sustainability Factsheet, 2010). To ensure product safety, the L’Oreal Group has been using cosmeto-vigilance – a cosmetic-testing system since 1970. To nurture the development and accelerate the application of the emerging technology, satellite production facilities and equipment have been installed, and an experimental model of eco-toxicity was developed by L’Oreal to test nanomaterial.

Baby Born

With the tremendous efforts of its research and innovation team in collaborating its basic scientific research together with the emerging nanotechnology, L’Oreal introduced its first nanoproduct – an anti-wrinkle cream in 1998 (Kaur and Agrawal, 2007). The nanotechnology allows the vitamin A to be stored in a 200-nanometer capsule and released when the outer shell dissolves under user’s skin (Paull 2003). Till 2006, the industry leader ranked 6^th in nanotechnology patents holders in the U.S.

(Source: http://www.forbes.com/2003/12/29/cz_jw_1229soapbox.html)

Commercial for L’Oreal Revitalift (nanosome tech)

True or false?

Cosmetics industry is built and developed on the fundamental of innovation, and sustainable innovation is the crucial element determining the success of each industry player. But does it mean that L’Oreal has adopted the perfect strategic approach?

L’Oreal’s core competence can be identified through value chain analysis and resource-based view:

It is realized that core competence of the L’Oreal Group lies on its capability in “strategic acquisition and management of international cosmetic brands” and “innovation and emerging innovation management”. L’Oreal’s strategic approach in acquisition and delegation in innovation equips the beauty group with sustainable competitive advantages and sustains business growth.

New value and new market, what’s more? The perfect strategic approach!

L’Oreal’s first-ever nanoproduct debuting in 1998 successfully captured the market for anti-aging product as the newly created value performed better in ways that mainstream customers already valued.  The open mindedness and all-about innovation approach allow the beauty giant in identify new value through its engagement in the diversified laboratory test collaborating its existing technologies with the emerging nanotechnology – L’Oreal’s first nanoproduct was launched after experimenting 350 formulas and testing for more than 2,500 times.

With its strategic approach, the L’Oreal group is confident in responding to the needs of diversified markets. There are 18 research centers worldwide being organized into 6 poles in Europe, U.S., Japan, China, India and Brazil. It allows the beauty group to stay closer with its customers, understand their needs and identify unexplored markets. L’Oreal has announced its ambition to add another 1 billion new customers to its existing patron base by the year 2020.

Conclusion: It's a world of hopes but also a world of fears

Cosmetics industry always welcomes emerging technology-based ideas like nanotechnology.  In company point of view, high profitability and strong consumer demand might sometimes cover the dark side of its adoption.  Lighten up the dark through continuous R&D and global regulation may increase consumer confidence in nanotech safety. Echo to what Hove stated at the beginning, emerging technology management should be the additional factor for the company to win the game.

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