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Skin Care’s Big Impact

By: Karen A. Newman
Posted: June 9, 2008, from the June 2008 issue of GCI Magazine.

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While Milbar elected to create its own brand in M Lab, GDMI chose to concentrate on formula development and manufacturing services for others. “Although a more narrow focus and the potential margins for in-house brands can be alluring, we’ve maintained this direction as a result of acquiring attractive manufacturing accounts that felt in-house brands created a conflict of interest for allocating resources and production scheduling,” says Ferrall. “We also felt it would dilute our expertise, so we’ve simply chosen to maintain focus on custom formula development and manufacturing.”

Pace Brings Pressure

The pressures of the fast-paced skin care market, including rapidly changing ingredient technologies and the uptick in cosmetic procedures, suggest to Ferrall that, “there’s tremendous pressure for manufacturers and distributors to differentiate their brands, broaden their market presence and deliver ‘surgical results’ nonsurgically.” She believes these pressures, “present ethical and legal conflicts as to how to develop and market medical results with cosmetic products,” and suggests that, “recent FDA seizures for alleged drug utilization in cosmetics suggest that some marketers are feeling the intense pressure to differentiate their brands, causing them to take greater risks with new ingredients.”

The trend toward natural materials brings pressures and challenges of its own. For Ferrall, the greatest challenge is that “companies and consumers don’t always understand that ‘natural’ (her emphasis) formulas do not always feel and perform the same as ‘traditional’ formulas.” As a result, she says, formula development can be more time-consuming and challenging, and may require educating the marketer. This can result in increased development time, a situation that runs counter to a key feature of outsourcing—increased speed to market.

The demand for natural ingredients and claims isn’t all bad, though, and Ferrall says her company and others “are finding many opportunities to use a vast array of new ingredients in ‘underdeveloped’ markets with entrepreneurial companies.” She says the big companies, “provide coverage and education to the general consumer, and this trickles down exponentially to the smaller companies that operate in many different markets. While there’s also a lot of misinformation that follows, which can complicate the development process, we’ve still found many opportunities to exploit natural and high-tech ingredients in somewhat nontraditional markets.”