Dermocosmetic Market Ripens With Uptake Of OTC Drug Ingredients

The market for specialized dermocosmetics expands rapidly as personal marketers join the fray with products containing OTC drug ingredients for hair and skin care, says Euromonitor Beauty & Personal Care analyst Nicholas Micallef. Coal tar, ketoconazole and salicylic acid are among drug ingredients increasingly making their way into the space.

Personal care and beauty product firms are jockeying for position in the competitive and fast-growing dermocosmetics market with products containing nonprescription drug ingredients targeting specific hair and skin care needs, says Euromonitor Beauty & Personal Care analyst Nicholas Micallef.

The analyst says the market for specialized-ingredient-based dermocosmetics, or cosmeceuticals, was previously a niche cornered by brands like L’Oreal SA’s La Roche Posay and Beiersdorf AG’s Eucerin.

But the segment is growing rapidly, even though such products are priced higher than traditional mass-market hair and skin care products and are often absent from mass-market aisles, sold instead in stores’ pharmacy areas or in doctors’ offices, Micallef noted during an Aug. 26 interview.

“Hair care is undergoing rapid development with changing formulations that greatly improve efficacy,” said Micallef in an Aug. 24 blog post, “Beauty and Healthcare Convergence.”

He attributes the improvements to firms’ incorporation of ingredients covered by FDA’s OTC monographs or approved via a new drug application. “Likewise, skin-care players like [Unilever PLC] are capitalizing on skin problems to advance established brands by offering targeted solutions,” he adds.

In hair care, companies increasingly are addressing scalp irritation with OTC ingredients, while in skin care the focus of products containing OTC ingredients is largely treatment of dry skin and acne, Micallef says.

“In the area of scalp health, companies have developed stronger products with anti-dandruff positioning formulated with pharmaceutical-style ingredients like tar and ketoconazole, aimed at treating itchy and flaky scalp,” the analyst notes.

Under the OTC monograph system, FDA has established coal tar is generally recognized as safe and effective at levels ranging from 0.5% to 5% in products addressing dandruff, sehorrheic dermatitis and psoriasis. Ketoconazole, used at a maximum 1% concentration in shampoo products – as in Johnson & Johnson/McNeil Consumer Healthcare’s Nizoral A-D product – was approved for over-the-counter use in October 2007. Patent exclusivity on the ingredient application expired in April 2014.

J&J’s Neutrogena line offers a number of treatment shampoos within the T/Gel Therapeutic range, a line of “dermatologist-recommended” products that address the symptoms of dandruff with active ingredients coal tar (approved for OTC use in dandruff treatments at concentrations between 0.5% and 2%), pyrithione zinc (approved at 0.3% to 2% concentrations in rinse-off products]), and salicylic acid (approved in levels ranging from 1.8% to 3%), a substance commonly used in skin-care products.

Hair Growth Poses Both Opportunity, Risk

Micallef cited hair-loss prevention as another area where consumers can find a growing selection of dermocosmetic products.

Previously available only by prescription, Pharmacia & Upjohn’s Rogaine (2% minoxidil) hair-regrowth formula successfully underwent an Rx-to-OTC switch, like Nizoral, in 1996, opening the door for wider use of the ingredient in consumer products. Rogaine Extra Strength, featuring 5% minoxidil, was OTC-approved by the same pathway in 1997. P&U is now owned by Pfizer, Inc., which sold the Rogaine brand to J&J in 2006.

In 2012, Procter & Gamble Co.launched Pantene Expert Collection Minoxidil Topical Solution (2%) Hair Regrowth Treatment products for women. The formulas retail for around $22 to $30 apiece, positioned as providing consumers an “elevated level of care” (Also see "P&G Unveils New Pantene Lines For Aging, Damaged Hair" - HBW Insight, 15 Oct, 2012.).

As minoxidil is the only hair-regrowth drug ingredient approved by FDA for OTC use, industry has been innovating to develop alternatives in the U.S. and overseas.

Early this year, L’Oreal Paris introduced Elvive Fibrology outside the U.S. The line is formulated with patented ingredient Filloxane, which is promoted as thickening hair volume over time.

German specialty chemical company Evonik Industries offers Sphingony, an active promoted as effective at balancing the hair life cycle and strengthening the hair follicle to prevent hair loss and improve scalp health.

However, in the U.S., products marketed on hair-growth or hair-loss-prevention claims run the risk of drawing enforcement action in light of an April 2013 FDA notice stating “any OTC drug product that is labeled, represented, or promoted for external use as a hair grower or for hair-loss prevention is regarded as a new drug” for which an approved New Drug Application is required for marketing. “In the absence of an approved [NDA], such product is also misbranded.”

FDA cites a host of ingredients that are not recognized as GRASE for the cited indications, including amino acids, ascorbic acid, benzoic acid, biotin and other B vitamins, estradiol and other topical hormones, jojoba oil, lanolin and wheat germ oil, among others that have been marketed in OTC products for external use as hair growers or for hair-loss prevention.

“There is a lack of adequate data to establish general recognition of the safety and effectiveness of these or any other ingredients,” and as such, “all labeling claims for OTC hair-grower and hair-loss-prevention drug products for external use are either false, misleading, or unsupported by scientific data,” the agency adds.

OTC Ingredients In Skin Care

The same trend of bringing OTC ingredients into the mainstream can be seen in the skin care arena, where Elizabeth Arden Inc., for example, has expanded into dermocosmetics with the launch of Elizabeth Arden Rx, a line that debuted in physicians’ offices in April (Also see "Elizabeth Arden Goes Pro With TPF 50, Sets “New Standard” In Sunscreen" - HBW Insight, 10 Mar, 2014.).

Products in the line contain titanium dioxide and salicylic acid, as well as an AHA/vitamin A combination.

Unilever PLC’s Dove brand recently introduced DermaSeries, touted as effective treatments for extremely dry skin. Dove’s website claims the products were developed with a dermatologist and work better at relieving skin than at least one prescription cream. The products contain active moisturizing ingredients dimethicone (6%), FDA-approved for OTC use in skin-protectant drug products at 1% to 30% concentrations, and 12-hydroxystearic acid.

Salicylic acid, approved for treating acne at levels of 0.5% to 2% in OTC drug products, is gaining popularity across mainstream skin-care brands as well. According to data from Euromonitor, volume consumption of salicylic acid tripled between the years 2007 and 2012.

Micallef notes in his post that dermocosmetics marketers face the challenge of differentiating their products from pure prescription topical products. “This pushes the need to gain further expertise and develop new technologies” to compete with prescription products, he said.

“Businesses must think out of their existing knowledge base and evaluate what synergies could be achieved by diversifying into adjacent categories where there is consumer demand and hence research that is worth investing in,” he adds in his article.

Mergers and acquisitions represent one viable pathway for such diversification, he suggests.

He pointed to Allergan’s acquisition of cosmeceutical firm SkinMedica in 2012 and L’Oreal’s acquisition of Indian firm Cheryl’s Cosmeceuticals in 2013, which gave the French beauty giant access to the professional skin care market. Experts have noted M&A activity has been on the rise as the global economy improves and companies look to tap new markets and categories (Also see "M&A Heats Up As Major Players Eye New Markets, Categories" - HBW Insight, 1 Sep, 2014.).

Micallef sees Elizabeth Arden’s foray into professional skin care as a move that makes it an attractive target for larger cosmetics firms. “That is a potential target for a company which wants an unrelated category in beauty,” he said.

Micallef foresees specialized hair and skin products with high-performance ingredients continuing to shape the beauty market moving forward. “High tech innovations will enable advanced ‘near-medical’ claims with the ultimate aim being of health-based beauty,” he said.

Industry experts believe that increasing use of FDA’s Rx-to-OTC switch pathway could expand the market for dermatological products, providing more options for formulators and enabling stronger performance claims (Also see "Dermatology, Nasal Sprays Among Emerging OTC Switch Categories" - Pink Sheet, 2 Jun, 2014.).