- What the beauty industry and its consumers gain is a higher level of science in the products. This is a definite raising of the bar in terms of efficacy.
- The way both industries deal with each other is in its infancy, yet, there is no question that the future of the beauty industry lies, at least in part, with biotech.
- As with any innovation strategy, one cannot expect the status quo to be enough or to even be a viable option. Survival is at stake.
When, after working 10 years on the technical side of skin care, I entered the world of biotech, I never thought that I would at some point find enough convergence between these fields to actually make merging the two a viable business.
At the time, biotech was primarily an entrepreneurial industry, focusing on the creation of potent cancer drugs, for example. Of course, there were companies making inroads—such as Genentech, Amgen and Gilead, which were beginning to make headlines as early as 2000—but the industry as a whole was not yet profitable. It would take six or seven more years for this to happen.
But it seemed companies everywhere were busy trying to persuade investors to inject a few million dollars into a new idea or a budding company. The dollar amounts were quite staggering, too, but raising more than $100 million in one fundraising effort was not considered exceptional.
Of course the beauty industry, with its short product lifespans and seemingly low price points, didn’t appear to be an industry likely to gain from these investments—with doubts that the profit margins would recompense. Even for the small investors, the future seemed bright within other sectors, and with the big firms leading the way, why bother with anything else—like beauty?
In fact, a speech given in 2001 by a top Amgen executive gloating over the fact that, a few years previous, annual biotech treatment costs of $10,000 per patient would shock many, but now (in 2001), treatment costs 10 times that amount—a staggering $100,000 per patient, per year—were easily accepted. This was short-lived, and biotech treatments costs such as these are no longer considered viable—or even ethical.
It was time for biotech companies to look for additional sources of profit.
And if the biotech industry hadn’t started to think in terms of out-licensing toward different industries, the beauty industry, on the other hand, was paying attention and preparing for its opportunity.
In 2001, P&G launched its Connect + Develop approach to external relationships with a strong focus on marketing ready-to-go innovations, and its acknowledgement that good ideas could come from a myriad of sources—outside the company, anywhere in the world and from any industry. This was quite a breakthrough for P&G, which had a long-standing reputation of working solely from within its walls. In 2003, Estée Lauder already had a biotech/beauty implementation plan, keeping a fairly tight watch over development in the field of biomedical research. And literature on the subject clearly showed that the line between biomedical treatments and skin care was getting blurrier by the day.
Suppliers were also gaining momentum toward making biotech a viable and lucrative addition to beauty. Vincience, since acquired by International Specialty Products, had notably produced a portfolio of actives and biotechnologies that made it clear that there were suppliers who meant serious business when it came to the incorporation of biotech in beauty ingredients.
Personal Experience—Witnessing Biotech and Beauty Merge
In the early 2000s, I was working as a science communications consultant with a large beauty corporation while also working on business development with young French biotech companies—specifically, helping them connect with new partners and clients in the U.S.
One such company, DBV, had developed and patented state-of-the-art delivery technology based on an especially elegant patch delivery system for powdered ingredients, using only electrostatic/electric forces to hold any kind of active ingredient. It sounded like a good idea at the time, and indeed it was. And as a partnership developed between DBV and its U.S. partner, I and the companies I worked with found ourselves crossing the beauty line more and more often. By 2008, it was clear that there was great potential in actively seeking partnerships and technologies that could be developed for the beauty industry. The benefits for both sides of the equation were undeniable. For beauty companies, there was an advantage in gaining technologies uniquely sourced and developed for them, and, for biotechs, the advantage of working with beauty companies is, simply, that it offers one avenue toward faster financial realization of a technology (see “Exploring Outsourcing—Challenges and Opportunities” in the June 2009 issue of GCI magazine or at www.GCImagazine.com). The beauty industry and its consumers gain a higher level of science in the products. This is a definite raising of the bar in terms of efficacy, as many of these biotech technologies come to a beauty company with clinical trials, and the overall standards for toxicity and efficacy testing are simply higher than those practiced in the beauty industry as a whole.
To anyone involved in this evolution for the past few years, it is evident that there are many hurdles and stumbling blocks toward successful partnerships and the merging of biotech and beauty. These are very different industries, with different expectations in terms of deal terms, return on investment and timeline, practices and approaches to science. In short, very different cultures. To that end, the way both industries deal with each other is in its infancy, yet, there is no question that the future of the beauty industry lies, at least in part, with biotech—as it will mean higher standards of efficacy, toxicity and research, and the way for the beauty industry to elevate consumer trust through real technological breakthroughs and advances. The relationship between biotech and beauty poses communication and structural challenges, but the results of overcoming these challenges will be well worth the effort. As with any innovation strategy, one cannot expect the status quo to be enough or to even be a viable option. Survival is at stake.
Jean-Francois Biry, CEO of DBV, knows that not every biotech company will be open to this. “When I came onboard, I was coming from the entrepreneur side of pharma, and my former company had signed deals with dermo-cosmetological companies. So, for me, taking the leap was easy. It was different for the starting team, that was essentially constituted by scientists. They just never thought in terms of consumer applications.”
One of the most frustrating aspects of building a working relationship between biotech and the beauty industry is the unilateralism of the relationship. “We are asked to provide a lot of information, but we hear very little in return. We get virtually no feedback,” says Biry. “That is a fundamental difference with the dealings we are used to having with pharma, where partners are really treated as equals, no matter what their size. The challenge in this [new biotech/beauty] relationship is for everyone to level with their counterparts, understand that there is a rupture in culture but also in modus operandi. Most biotechs won’t know how to do that, so it will work only if there is, inside the beauty company, a pertinent project manager understanding those differences.” This is the key to finding interesting projects in biotech that can potentially become a differentiation point from a beauty company’s competition—particularly as a brand owner.
You have to find those teams that no one else has been able to find before you, or been able to work with before you. Otherwise, the technology is soon picked up by a smart supplier and everyone has access to it. And that is where another challenge lies. Many biotechs haven’t thought of licensing to beauty. Sometimes because it is just not something that comes to mind naturally to researchers focusing on disease all day long, just like DBV’s initial team. In other cases, a smart business developer thinks about it but doesn’t really know how to approach the beauty industry and know what to expect.
Such Was the Case ...
When I began to work with Oculus Innovative Sciences—a biopharmaceutical company that develops, manufactures and markets a family of products intended to help prevent and treat infections in chronic and acute wounds—it seemed clear that there were opportunities in personal care. An antibacterial product with anti-inflammatory properties doesn’t come along everyday. When I contacted them, the answer was yes, they figured there might be some business development opportunities in the personal care arena, but the company really didn’t know how to go about transferring technologies. Yet, they had a lot of good ideas. They just needed a road map and to understand perfectly where the potential of their technology was, as well as its limitations.
Things such as compatibility with other ingredients didn’t seem to be a big deal to them, as the product was active, non-toxic, tested on more than a million patient wounds—and it seemed to be all that mattered. Fragrancing was not something that really seemed relevant either.
However, for the cosmetic formulation chemist, the ingredient should be turnkey and be able to be fragranced. So we began work on this, and my job, in part, was to get the skin care teams to realize how efficient and safe the product is, but that it may also require some concessions on their part to formulate with it. Again, there was a need to meet halfway—but, as with other avenues of innovation, those who know how to think outside the box reap the benefits and leave those with “me-too strategies” behind.
And there are biotech companies that do come to conclusion to partner within the beauty industry on their own, because, as is often the case, they realize that they may not be able to run the distance all the way to drug approval without another source of income to help in the process—a direct outcome of the fact that it has become increasingly difficult for biotechs to find financing during the past 10 years. For others, leveraging existing assets with another industry just makes good sense. That is the strategy taken by LibraGen, which applies functional genomic technologies in combination with industrial expertise to develop new bioprocesses for the discovery of novel bioactives.
“Our first application in early development, 2001–2003, was oriented toward pharma,” explains Renaud Nalin, LibraGen’s CEO. “We knew that the time needed to see any kind of ROI was very long. To optimize our business strategy, we started looking at other markets; that is how we came up with specialty chemistry and cosmetics. For fine chemistry, our market is very similar to the pharmaceutical chemistry market. For cosmetics, there was a lot we could do with our green chemistry, which is our specialty. We developed a line of compounds for skin care that would help us break into the market and sell further custom development projects.”
One of LibraGen’s assets was the ability to find a development partner early on, and work with YSL Beauté to develop its first modified polyphenol. The line of products currently available is constituted by polyphenols grafted with a sugar group—improving stability, solubility and bioavailability. The partnership was first approached in January 2008, and distribution partners entered the picture in April of that year—highlighting the potential of a biotech/beauty opportunity to take off when the opportunity is properly executed.
Revance Therapeutics, Inc., a biopharmaceutical company dedicated to developing the next generation of innovative products in dermatology and aesthetic medicine, is another example of a biotech company that advanced its platform through marketing its products and capabilities to the beauty industry. In its case, the discovery of the technology was incidental. The research team, during the early stages of the company’s history, was working on transcutaneous technologies for cardiology. The idea was to make stents more efficient. When looking at its results, the company realized that it had triggered the production of elastin in adults, typically dormant after young adulthood. The company looked at the IP landscape in dermatology, and saw that there hadn’t been a lot of innovation since retinoin and the latest psoriasis compounds.
Revance, unlike many other biotech companies, developed a full-blown product line—backed and leveraged by consumer tests, a communications strategy, etc. The company is atypical in that it has really done the homework for those beauty companies that it is now approaching with its technology. Revance has existing sales, packaging, a name ... even beauty awards. Eye Silk, part of its Relastin line, received the Allure Beauty Award two years in a row.
Niqui Hunt, the company’s vice president of marketing and business development, has a background in the beauty industry coupled with seven years in medicine and medical devices. Her time spent at P&G allowed her to leverage a knowledge of how the industry functions, but she did get culture shock when coming back to the cosmetics arena, via innovation sourcing. “When I went back to [the beauty industry] through Revance, I was surprised by what I encountered,” she says. “The industry seems somewhat schizophrenic when dealing with [biotech]. People are very impressed with the science, but even though we are not a start-up company and bring a lot to the table, they can’t make a decision. They have so much coming their way that the initial screening is left to people who sometimes are not senior enough to sort through all the really interesting opportunities. It is really difficult to get in touch with people who [are] likely to take a risk on a given opportunity. They will go for less novel but maybe better substantiated solutions. Yet, innovation is defined by risk level. They would prefer to [forego risk] as opposed to creating a breakthrough compound. Breakthrough is just not rewarded,” said Hunt.
It, too, can be difficult to recognize the breakthroughs and innovations because they often lie in the technology and not in the ingredients. And a technology could potentially land in the lap of a company that simply doesn’t have the muscle to co-develop it, which is, often times, the price to pay to get something completely new and unique. But the biotech companies active in the beauty industry really do raise the bar in terms of cosmetics active standards. Not only do they bring significant innovation to the table, they also make sure that this innovation translates into real clinical progress, doubled with impeccable safety.
The potential benefits of finding those rare opportunities are enormous for the beauty industry. And in the era of transparency, consumer-driven design and quick-moving technological progress, partnerships such as those offered by biotech will allow the industry to answer those new challenges. If biotech and beauty can learn to work together in a wider scope, the possibilities are quite staggering.
Marie Alice Dibon, PharmD, is the principal at Alice Communications, Inc., helping companies in the life science sector to develop innovative technologies.